McCormick & Nicholson - FAQs -Property...
I am going to buy with my partner or some friends, do we need special arrangements?
When do I pay stamp duty and how much is it?
How do I sign deeds that are sent to me?
At what stage do I instruct a solicitor?
Do I have to sell before I buy?
Can the same solicitor act for both seller and purchaser?
When should I instruct a survey?
What does "noting interest" mean?
What is meant by "offers over"?
What is meant by "offers around"?
What is meant by "fixed price"?
What are the main differences between buying property in Scotland and England?
I am going to buy with my partner or some
friends, do we need special arrangements?
Property Agreements
More unmarried couples than ever are buying
properties. In these situations, title is often taken in joint names of the
parties with no provision for how the property is to be dealt with in the event
of the separation of the parties.
In many cases, the parties do not contribute the same amount to fund the purchase; while in others the mortgage repayments are shared equally between the parties.
We can advise you about the preparation of an Agreement regulating how the property will be dealt with in the event of the separation of the parties. This Agreement will include, where suitable, detailed provisions for how the property is to be sold and the sale price apportioned if the parties cannot agree as to the division of the proceeds arising from the sale of the property.
When do I pay stamp duty and how much is it?
Stamp Duty is a tax which is payable only by the buyer.
Where the purchase price is £125,000 or less, the buyer will not have to pay Stamp Duty. Stamp Duty is payable on the whole price, not just the amount of the price which falls above the limit. Stamp Duty must be paid on settlement of the purchase and we will ask you to let us have sufficient funds to meet the Stamp Duty shortly before the settlement date and request that you sign either a form called an SDLT Return or a mandate enabling us to sign the form electronically on your behalf.
When we receive the Disposition (title document in the buyer's favour) at settlement, we then either send the signed SDLT Return to HMRC Stamp Office or submit the Return on-line if the aforementioned mandate is in place. The Stamp Office will check the form and ensure that the correct Stamp Duty has been paid and then return a receipt to us. The Disposition can then be registered at Registers of Scotland. The rate of Stamp Duty will vary with the purchase price and the current rates are as follows:
|
Purchase Price |
Rate of Duty |
|
£125,001 - £250,000 |
1% of the purchase price |
|
£250,001 - £500,000 |
3% of the purchase price |
|
£500,001 and over |
4% of the purchase price |
There is currently a Stamp Duty exemption for First Time Buyers when purchase price is below £250,000.
From April 2011 Stamp Duty on values in excess of £1 million will be charged
at 5% of the purchase price.
The rate of duty is rounded down to the nearest five pounds.
For Commercial Property Stamp Duty starts at £150,000
How do I sign deeds that are sent to me?
The following instructions provide help for individuals
signing deeds all in accordance with The Requirements of Writing Act that came into
force in 1995. It is important for the validity of the document that it is
signed properly and individuals should therefore read these guidelines before
signing the document. The grantors and one witness must sign the document.
The grantor or grantors of the document must:
(a) read the document carefully;
(b) SIGN on the last page of the document (and the last or
only page of any Inventory, Plan or Schedule attached to the document) with his
or her usual signature, where indicated;
(c) Sign in the PRESENCE of one witness or verbally
acknowledge the signature to him/her.
The witness must:
(1) be an adult;
(2) witness the signing or hear the grantor or grantees
acknowledge the signature(s);
(3) SIGN on the last page only (NOT the Schedule, Inventory
or Plan);
(4) write the word "witness" in his/her OWN
HANDWRITING, after his/her signature;
(5) know the grantor.
What is a closing date?
A closing date is the method by which the estate agent
brings together all the interest in the property. A date is set and intimated
to all parties who have noted interest and that is the time by which they must
have a written offer lodged. Normally the offerer's
solicitor will lodge the offer on the morning of the closing date. At the
appointed time the offers are opened and then it is for the sellers to consider
the offers and the various terms and conditions in them and decide if they are
going to accept any of the offers. There is no obligation on the seller to
accept the highest or indeed any offer, though it is unusual if one of the
offers is not accepted.
At what stage do I instruct a solicitor?
Good professional advice and guidance is invaluable. We
would always recommend that you seek a solicitor's advice at the earliest
opportunity.
Do I have to sell before I buy?
Management of a sale and purchase is always difficult.
Again market conditions may dictate tactics but it must be borne in mind that
the submission of an offer is the first step towards the conclusion of a
contract and all contracts contain heavy financial penalties in the event of
default by the purchaser. A purchaser who commits to a purchase before
concluding a sale must be sure that he or she is able to finance the purchase
in circumstances where they have to pay for their purchase before they conclude
a sale.
What is pre-owned assets tax?
Pre-owned assets tax is a free standing income tax
charge which commenced on 6 April 2005. The tax is a charge on the benefit
people enjoy by having free or low-cost enjoyment of assets they formerly owned
(or provided the funds to purchase). The charge applies both to tangible assets
(with separate provision for land, including living accommodation,) and to
intangible assets. Broadly following the model of the benefit-in-kind charge on
employees, the rules quantify an annual cash value for the benefits enjoyed by
a taxpayer: this is treated as an addition to their taxable income, subject to
a threshold, and a set-off for any payments made by them for the benefit.
The charge does not apply to the extent that:
the property in question ceased to be owned before 18 March
1986;
property formerly owned by a taxpayer is currently owned by
their spouse;
the asset in question still counts as part of the taxpayer's
estate for inheritance tax (IHT) purposes under the existing "gift with
reservation" (GWR) rules;
the property was sold by the taxpayer at an arm's length
price, paid in cash: going further than the consultation document, this will
not be restricted to sales between unconnected parties;
the taxpayer was formerly the owner of an asset only by
virtue of a will or intestacy which has subsequently been varied by agreement
between the beneficiaries; or
any enjoyment of the property is no more than incidental,
including cases where an out-and-out gift to a family member comes to benefit
the donor following a change in their circumstances.
More generally, the rules for tangible
assets means that former owners will not be regarded as enjoying a
taxable benefit if they retain an interest which is consistent with their
ongoing enjoyment of the property. For example, the proposed charge will not
arise where an elderly parent formerly owning the whole of their home passes a
50 per cent interest to a child who lives with them.
Intangible assets formerly owned by the taxpayer (or derived
from other property formerly owned by them) are treated as giving rise to a
taxable benefit, only to the extent that the taxpayer may derive benefits from
them, and those benefits would diminish the benefits potentially available to
others. So for example, no charge would apply if the taxpayer has funded life
insurance policies held on trust and the taxpayer's continuing claims are
limited to particular retained benefits, such as the return of the life
assurance premium, and the balance of the policy value is held on trust solely
for others. But a charge would be due if, say, the whole value of such a life
policy was held in discretionary trusts for a class of beneficiaries including
the settlor (and the circumstances were such that the
trust property was not covered by the existing "gift with
reservation" rules).
Territorial scope
The
charge applies to residents of the
There is a de minimis (i.e. minimum)
threshold below which the cash value of benefits in a given year would be
disregarded, set at £5,000 per year. The cash value of benefits may be
determined by reference to market rentals or by reference to the District Valuer.
Can the same solicitor act for both seller and purchaser?
Generally speaking the answer is no, however there is an
exception to the rule and that exception is known as the "established
client rule". If a firm of solicitors has previously acted for the parties
then they may with the consent of both parties act. This rule extends to cover
situations where the firm has acted for members of the immediate family, close
relations may therefore be regarded as established clients.
If the seller is a builder or developer then any solicitor who has acted in any part of the process, including as estate agent only, is precluded from acting for a purchaser.
How do I get a mortgage?
The advice and guidance of a good broker is essential.
The mortgage marketplace is a confusing maze. A good broker really can save you
money and most brokers do not charge up front fees, generally being satisfied
with the procuration fees paid directly to them by
the lenders. We do not offer a mortgage brokerage service but are happy to
introduce clients to brokers we have worked with in the past and who we have
found to be efficient and friendly.
Do I have to have a survey?
There is no obligation on a purchaser to have a survey,
but it is simple prudence to seek professional advice to confirm the condition
of any property. Every home offered for sale on the open market since December
2008 must have a Home Report. A Lender may well insist on commissioning a
separate mortgage valuation.
I.
Valuation for Mortgage Purposes
The
nature of this type of valuation is set out in the RICS Valuation and Appraisal
Manual. The following is a brief summary of the main characteristics of the
service:
1. The Valuer's Role
The valuer's role is to advise the
lender as to the open market value at the date of inspection and as to the
nature of the property, together with any factors likely to materially affect
its value.
2. The Scope of the Inspection
Subject to the valuer's judgement, a visual inspection is to be carried out of so
much of the exterior and interior of the property as is accessible to the valuer without undue difficulty.
The inspection is made whilst standing at ground level and
at various floor levels. Parts not readily accessible or
visible are not inspected. Furniture and effects are not moved. Floors
coverings are not lifted. Cellars are inspected to the extent that they are
readily accessible but underbuildings are
specifically excluded from the inspection. Roof voids are inspected only from
the hatch without entering the roof void. In the case of flats, roof voids are
inspected to the same extent if there is direct access from the flat.
This is a limited inspection for the specific purpose
stated. It is normally carried out in a much shorter time scale than a
homebuyer's survey and valuation.
It is normally carried out to the direct instructions of the
lender but where it is instructed privately, the general terms are incorporated
as though the report were being prepared for a lender.
3. The Report
The report is confined to answering questions raised by the
lender. It contains reference only to those matters which might materially
affect the value.
II.
The RICS/ISVA Homebuyer's Survey and Valuation Service (
The nature of this service is set out in the RICS Valuation
and Appraisal Manual. The following is a brief summary of the main
characteristics of the service:
1. The Service
The homebuyer service includes:
An inspection of the property
A concise report based upon the inspection
A valuation, which is part of the report.
The main aims of the service are to give guidance on value
to the client, together with professional advice which will help the client to
choose whether or not to go ahead with the purchase and to be clear what
decisions and actions should be taken before completing the purchase.
2. The Scope of the Inspection
The inspection is a general surface examination of those
parts of the property which are accessible: in other words, visible and readily
available for examination from ground and floor levels. Furniture, floor
coverings and other contents are not moved or lifted and no part is forced or
laid open to make it accessible.
Services are inspected but not tested. Drains covers are not
lifted. Such equipment as a damp meter, binoculars and a torch may be used. A
ladder is used for hatches and for flat roofs not more than 3 metres above ground level. Accessible roof spaces and underbuildings are inspected, provided this can be done
safely and without undue difficulty. Common areas of flatted blocks are
inspected to assess their general condition.
3. The Report
This
provides the surveyor's opinion of those matters which are urgent or
significant and need action or evaluation before an offer to purchase is made.
Matters assessed by the surveyor as not urgent or not significant are outwith the scope of the service and are generally not
reported. The report contains the valuer's opinion as
to open market value and advice on valuation for insurance purposes.
III.
Home Reports have been required since 1st December 2008. All sellers marketing their residential properties after that date must provide the Home Report at their expense before putting the property on the market. The Home Report consists of three documents:
1. A Single Survey, prepared by a surveyor, giving the condition and value of the property; 2. An Energy Report, covering the energy efficiency rating and environmental impact of the property; and 3. A Property Questionnaire covering details about the property such as consents for alterations and the existence of guarantees for timber treatments etc.
Often the Home Report does not substitute for buyers obtaining their own survey report as mortgage lenders will not accept the Home Report in place of a mortgage valuation report instructed by them
When should I instruct a survey?
Views on this vary. In the past offers which were
subject to survey would not be looked at, but recently there has been an
increasing trend towards offering before instructing a survey and the Home
Report provides fairly comprehensive information as to condition and value.
What are missives?
Missives is the term applied to the exchange of a series
of letters between solicitors comprising a formal offer, qualified acceptance
and other letters which are exchanged leading to a conclusion of a bargain, in
other words the letters that go to make up the contract for sale. In
The offer contains Clauses that are needed to make sure that
the buyer receives a proper title to the property in exchange for payment of
the price. Besides this, the offer gives the buyer the right to get hold of
documents such as planning consents or building warrants relating to any
alterations, and any timber guarantees.
The seller's solicitor would normally then send an
acceptance known as the qualified acceptance to the buyer's solicitor but which
would contain qualifications. These qualifications can relate to changes in the
price, changes in the date of entry, or qualification
of any of the other clauses and will add new clauses.
Missives normally comprise a series of letters and end with
a letter from one solicitor to the other confirming that all matters have now
been agreed and that the bargain is now concluded.
This series of letters make up the missives and represents
the formal contract between the buyer and seller. If a dispute arises between
the buyer and seller before or, in some cases after, the date of entry then the
matter would normally be resolved by referring to the missives. In the event
that the dispute cannot be resolved informally the missives form the contract
which may form the basis for a court claim for breach of contract.
Until the missives are concluded there is no contract
between the parties and either party can normally withdraw from the contract
without liability. As a result it is important that missives are concluded as
quickly as possible. It is helpful to us to have as much information as
possible when the house is put on the market.
What does "noting interest" mean?
Noting interest is a convention only and places no
obligation on the seller or the agent. It is the way that potential buyers
indicate serious interest and of saying that if there is to be a closing date
for offers they wish to be told and to be given the opportunity to submit an
offer. From the sellers point of view it is useful tool in managing the sale,
gauging the interest and then bringing the interest together at a closing date
to get the best price at closed bidding.
It should be noted that "noting interest" does not
mean that a closing date has to be set and if the seller were to receive an
extraordinary offer from a third party there is nothing to stop the seller
taking the "bird in the hand" and ignoring the noted interests.
What is meant by "offers over"?
This indicates that the seller expects to receive offers
over a certain minimum stated price. The percentage over the stated asking
price that properties sell for varies from area to area and even depends on the
type of property and the general level of market activity. In any market the
laws of supply and demand apply and where there is a lot of demand purchasers
have to bid up to try and secure properties. We can advise you of the current
market conditions.
What is meant by "offers around"?
This indicates that the seller hopes to achieve the price stated or over that price, but may consider an offer in the region of the price stated.
What is meant by "fixed price"?
This indicates that the seller will accept the first unconditional offer they receive for the price stated. Time is therefore of the essence if there is more than one interested party and generally the first unconditional offer received by the sellers' solicitor will be successful. Therefore you should consult your solicitor early to ensure that all preliminary matters such as verifying your identity have been carried out so that your solicitor is in a position to move more quickly on your behalf.
What are the main differences between buying property in
Whilst we cannot comment on the procedures in
Instruction for submission of an Offer:
A prospective purchaser should fully satisfy himself/herself with regard to the
condition of the property and its value. This is normally done in the case of
domestic properties by having the property surveyed by a Chartered Surveyor or,
in the case of agricultural property, by obtaining an opinion from a Chartered
Surveyor/Land Agent. However Offers which are conditional upon the Offerer subsequently obtaining an acceptable survey report
or valuation are increasingly common and we can advise you whether, in the
circumstances, you should have your Survey carried out in advance of submitting
your Offer.
Finance:
If a purchaser requires to arrange finance to fund the purchase then the
finance should be in place before the Offer is submitted. Usually the Lender
will require the completion of a formal application form and to have had sight
of a Survey Report and will then issue an Offer of Loan to the purchaser and
his/her solicitor, detailing any special conditions which may apply to the
mortgage loan.
The prospective Purchasers having satisfied themselves as to value and condition should then instruct their Solicitor to submit an Offer on their behalf. An Offer in Scottish form is fairly lengthy and will contain relevant conditions not only relating to price and date of entry (completion) but also covers matters relating to the title, title conditions and any alterations which may have been carried out to the property.
Closing Date:
Where several parties have indicated an interest in a property, the Selling
Agents normally fix a closing date. This is a specified date and time for
receipt of Offers. By convention Offers are usually delivered or faxed on the
actual closing date itself. The Seller is not obliged to accept the highest
Offer, though it is usually only in the case of Offers failing to come close to
the anticipated asking price that Offers would be
refused and the property re-marketed. Whilst the terms of the Offer will vary
according to the particular circumstances and type of property and indeed may
run to as many as thirty separate clauses and conditions, the two over-riding
conditions are, firstly, the purchase price and, secondly, the date of entry.
The date of entry is the date when the transaction will be completed and when
in exchange for the price, the purchaser will receive title to the property and
vacant possession.
In the purchase of domestic properties no deposit is payable. By convention on purchase of agricultural land or landed estates, a deposit of 10% is payable within seven days of conclusion of the bargain.
The Offer:
The formal Offer is submitted by the Solicitor acting for the Purchaser, who
signs on behalf of the prospective purchaser as his Agent. Normally a letter of
instruction from the prospective purchaser confirming that the Solicitor should
proceed to submit an Offer is required. Whilst it is unlikely that a seller
would instruct his Solicitor to issue an acceptance without any qualification
whatsoever, were that to happen the exchange of the
Offer and the Acceptance would constitute a binding and enforceable legal
contract. In practice, the Seller’s Solicitor issues a qualified
acceptance which could intimate the acceptance of the offer in principle but
might qualify one or more of the terms and conditions of the offer and may add
more conditions or obligations on the purchaser. This is effectively a
counter-offer and it is up to the purchaser to either accept these
qualifications in total, accept the qualifications in
part and introduce further qualifications or reject the qualifications and walk
away from the negotiations. The issue of a partial acceptance and further
qualifications will lead either to a final acceptance concluding the bargain or
perhaps some further adjustment. The process of adjustment of the
“missives” as they are known should lead to a concluded contract.
This process usually takes at least two weeks but can be even more protracted.
The concluded contract may contain some suspensive
conditions which require to be fulfilled by either the seller or the purchaser.
One example would be that the seller would be obliged to produce clear Local
Authority Planning Reports but in the event that those Reports were to reveal
any matter materially prejudicial to the Purchaser then the Purchaser would
have the right to withdraw from the transaction without penalty.
The date of entry contained in the Offer should be sufficiently far in advance to allow the Solicitors adequate time to complete all the conveyancing formalities and, if appropriate, the security work for any Lender and consequently the date of entry is usually fixed for a date six to seven weeks after the submission of the Offer. The date of entry, however, is an essential condition which must be agreed between Purchaser and Seller and depending on circumstances the date of entry may be any date acceptable to both parties.
The principal difference in the system of land purchase in
It is however possible to submit an offer in
The foregoing is intended to be only a guide to the practice and procedures
applicable in