Purchasing a property - costs explained
PUBLISHED: 08:52 15 December 2017 | UPDATED: 09:19 15 December 2017
If you are thinking of purchasing your first home or moving house, it is important to understand all of the costs involved before you start house-hunting. Your solicitor will handle the legal work around the property, however, there are some extra costs involved within the conveyancing process. When planning your budget we would advise you to consider:
• Legal fees – These are the costs involved for your solicitor to research the title to the property and ensure the legal title vests in your name upon completion. These may be higher if the property is leasehold and/or you are using the Help to Buy scheme.
• Bank transfer fee – This is the fee to send monies to the seller’s solicitor on the completion date.
• Pre-contract searches – These are undertaken to check the records of the property which are held by the Local Authority and other agencies, such as the water and drainage provider(s). A Local Authority Search states who is responsible to maintain the roads which are required to access the property. An Environmental Search determines the risk of the land being deemed as contaminated land and the risk of flooding, among other things.
• Pre-completion searches – These are usually undertaken in the week before completion to ensure no adverse or additional entries have been made to the property title (ie the seller has not taken out another mortgage). If you are taking out a mortgage, a bankruptcy search will also be required to check you have not been declared bankrupt.
• Land Registry fee – This is incurred when your solicitor submits the application to register you as the new owner of the property at the Land Registry.
• Stamp Duty Land Tax – This will often be the largest payment required at completion unless you are covered by the new first-time buyer relief.
• Lawyer checker fee – If the seller’s solicitor are unknown to the buyer’s solicitor, the buyer’s solicitor will check the bank details against a database to prevent dealings with fraudulent firms.
For new build properties there may be the following additional fees:
• Engrossment fee – This is paid to the seller’s solicitor if they drafted the transfer (which is usually the task of the buyer’s solicitor though it is not practical where the developer requires covenants etc to be the same across a development) which will be registered at the Land Registry.
• Service charge – payable if part of the development is maintained by a management company to contribute towards the upkeep of private roads and communal areas.
This is an overview as to the costs involved and consideration of these will ensure you are fully aware before entering into the buying process.
This column is sponsored by Spire Solicitors, 01603 677077, www.spiresolicitors.co.uk