For first-time buyers, acquiring a property is often quite an exciting, yet challenging process. There are a lot of prerequisite obligations that one must fulfil to become a legally-recognised property owner. From legal and financial requirements to regulations and paperwork, there is alot that you would need to put together to complete the conveyancing cycle. This is why it is vital to hire an experienced conveyancing solicitor to streamline the process. However, before you dive into conveyancing, you might want to understand how the process works, its cost, and what you need to get started. This guide explains everything that you should know about property conveyancing.
Conveyancing is defined as the transfer of the legal ownership or title of a property from one person to another. Usually, conveyancing comprises two principal stages, which include the exchange of contracts and completion. The exchange of contracts stage is where the terms of the transfer are established. The completion phase, on the other hand, is where the legal title is transferred to the new buyer. Like any other legal process, conveyancing has a set of principles that must be adhered to, from inception to the last phase.
Generally, property buyers can undertake the conveyancing process by themselves. However, conveyancing can be quite complex and time-consuming. This is because, in some cases, you may be required to have specialist knowledge in specific applications, such as leasehold properties. Additionally, most lenders may demand working with professional solicitors, that is, if you are acquiring your new property through a mortgage. For this reason, most buyers are left without an option but to hire professional solicitors. These are legal practitioners regulated and licensed by the Council for Licensed Conveyancers to act on behalf of the seller or buyer.
How the Conveyancing Process Works
This step by step guide discusses the basics of the conveyancing process, with a highlight of everything that goes into every phase.
Stage One: Hiring a Solicitor or licensed conveyancer
Once you are decided on your interest in buying a property, you will need to hire a conveyancer or solicitor who will act on your behalf throughout the process. At this point, your solicitor will open a new file under your name, outline their terms and charges, and confirm every detail needed for the process. Keep in mind that some conveyancers may be more expensive than others. You might, therefore, want to compare a list of conveyancing service providers before hiring your solicitor. You might also want to work with an expert solicitor who is experienced in handling conveyancing processes. This way, you will be sure your property conveyancing process will go on seamlessly to the completion phase.
Stage Two: Initial Paperwork
Upon accepting your offer to buy the property in question, the seller’s conveyancer will initiate the process by drafting a contract. The contract highlights the price of the property, terms of sale, and the conditions of the deal. You should also be able to get the necessary information regarding the property, including its current status and details of the legal title. Your solicitor will go through the provided paperwork to verify that it is compliant with all the legal requirements.
Stage Three: Survey, Searches, and Enquiries
After carrying out preliminary checks on the initial paperwork, the seller’s conveyancer will issue your solicitor with copies of the property’s title deed and contract. The next thing will be organising a survey on the property you intend to purchase. The purpose of the survey is to establish the status of the property, future development plans of the local area, and other external factors, such as drainage systems. Your solicitor will also carry out searches to ensure that there is no withstanding factor to hinder your enjoyment of the property. For example, a search may establish the property’s exposure to the risk of floods, land contamination, and other environmental factors.
Stage Four: Mortgage Application
This stage is only necessary if you are purchasing the property via a mortgage. At this stage, you will need to provide your lender with every important information regarding the property. The lender will then carry out property valuation to ensure that it is worth the requested mortgage amount. In most cases, the lender will request your solicitor to act on their behalf in carrying certain checks on the property. If all the conditions are adhered to, the mortgage lender will be set to release the funds. Once your solicitor has checked the terms of the mortgage, you will be required to sign the mortgage deed to accept the mortgage offer legally.
Stage Five: Exchange of Contracts
This is one of the most crucial steps of the conveyancing process. It is a commitment by both the buyer and seller to transact the property in question. Withdrawal, breach, or change of terms of the contract may result in severe financial penalties and liability for the damages suffered by the other party.
Before you exchange contracts, your solicitor will provide you with some documents to ensure that you are satisfied with the deal. Such documents include the following;
- Mortgage deed.
- A report on the status of the property.
- Fixtures, fittings, and contents form.
- Property information.
- Title information document, etc.
Having fulfilled your legal obligations, signed all the necessary documents, and responded to all enquiries, you can have a mutual agreement on the ideal completion date. In most cases, you might be required to pay a deposit when exchanging contracts, which is often a specified percentage of the property’s total price.
Stage Six: After Exchange of Contracts
Before the completion date, there may be a chain of transactions that require some fixing. This is especially so if there were some matters left pending after the exchange of contracts. Some of these transactions may include the final land registry, signing the transfer deed, and preparation of financial statements.
Stage Seven: Completion
This is the last phase of the conveyancing process. It involves the buyer sending the agreed amount of money to the seller (through their solicitor), after which you are issued the keys to the purchased property. Completion takes place immediately you transfer money to the seller. In most cases, the keys are picked from the responsible estate agent. After completion, your solicitor should also act for you in registering your legal ownership, as well as pay the outstanding Stamp Duty Land Tax (where necessary).
How Long Should the Conveyancing Process Take?
On average, the process of buying a new property should take between 8 and 12 weeks. Here is an example of a breakdown of events that you should expect to experience throughout the conveyancing period.
Week One and Two: Initiating the Process
For the first two weeks, it is expected that the seller will have accepted the offer to sell the property in question. Around this period, the buyer will hire a solicitor, obtain the draft contract, and make any necessary enquiries. You should also be able to apply for a mortgage within these two weeks.
Week Three and Four: Searches and Acceptance of Mortgage Offer
Searches can take quite some time. However, by the fourth week of the conveyancing process, your solicitor should be set to receive all the search results. Once the mortgage lender is satisfied with your application, they should be ready to issue you an offer by the fourth week of application.
Week Five and Six: Pre-Completion
By around the 5th or 6th week, the seller’s solicitor should be ready to send you a property report and the necessary documentation for signing. When all the enquiries have been responded to and the prerequisite documents signed, your solicitor and seller’s conveyancer will agree on a possible completion date. The seller’s conveyancer will need to confirm the viability of a suggested time and date with all the parties within the conveyancing chain.
Week Seven and Eight: Exchanging Contracts
Once the seller and buyer are ready and the solicitors have agreed on a completion date, the next step would be the exchange of contracts. This should happen by the 8th week in the process. This means that the involved parties are ready to get into a legally binding agreement. As a result, both the buyer and the seller should prepare to move into and out of the concerned property, respectively.
Week Nine and Ten: Completion
Around the ninth or tenth week, your solicitor should send the agreed amount to the seller. The seller will then issue the keys to the property through their estate agent or conveyancer, after which the conveyancing process will be considered complete.
Week Eleven and Twelve: Post Completion
By the 11th week, you should be moving into your new house. It is important that you make arrangements with your solicitor to deal with any legal post-completion formality, such as payment of Stamp Duty and ownership registration.
Note: The conveyancing process can take lesser or more time than 12 weeks, depending on the factors surrounding the purchase. Some of the factors that may affect the conveyancing timeline include the following;
- Breach of Contract. If the seller changes their mind on selling the property in question, the process can be delayed. This is likely to happen before the solicitors get to exchange contracts.
- Adverse Survey Results. When the search results indicate a condition contrary to your expectations, there may be a need for further investigation or repair, which means more time into the process.
- Issues with the Title Deed. If there are problems around the property’s title deed, such as missing documents, you may be forced to halt the purchasing process.
- Conveyancing Chain. The more parties there are in the conveyancing chain, the more time it will take to complete the process. The vice versa is also true.
The Cost of Conveyancing
There is no fixed cost for the conveyancing process. How much you spend in the conveyancing process depends on the type of service you choose. For example, hiring an online conveyancer is typically a cheaper option than traditional solicitors. However, according to research, homeowners are expected to incur conveyancing costs of anywhere between £330 and £1,050.
Generally, a typical conveyancing quote will consist of two types of costs, including the following;
- Basic Fee
This is what you pay the solicitor for their time and services, and it can vary depending on the method applied to arrive at the figure. While some conveyancers charge a fixed basic fee, others will require you to pay them on an hourly basis. The latter is often linked to an accumulation of extremely high amounts, and it should be avoided at all costs. The method commonly used by solicitors to calculate the basic conveyancing fee is the sliding scale approach. This is where you pay the solicitor based on the total value of the property in question. This means that the higher the value of the property, the more you are likely to pay.
Also, note that the basic fee can be high depending on whether the property concerned is leasehold or freehold. The transfer of ownership of a leasehold property involves a lot of paperwork and documentation, which is why you are bound to pay more.
These are the fixed costs incurred by the solicitor throughout the conveyancing process. The fact that disbursements are fixed means that they should be the same across all quotes, regardless of who is offering you the service.
Here is a highlight of disbursements that you should expect to pay when purchasing a property.
- Land registry (£4 to £8)
This is the cost of land registry office copies that you incur when doing a search on the authenticity of the property you intend to purchase. This should inform you whether the seller is the legal owner of the property.
- HMLR Final Search (£3 to £7)
This is a search, usually the final one, carried out before the completion date.
- Bankruptcy Search (£2 to £4)
This is one of the few formal searches that a mortgage lender may require you to undertake before issuing you a loan. The purpose of a bankruptcy search is to confirm that you have not been declared bankrupt in the recent past.
- Environment Search (£30 to £35, exclusive of tax)
This search evaluates the environmental status of the ground surrounding the property concerned.
- Local Authority Searches
A local authority search protects you from local development plans that may affect your ownership or status of your property after you have moved in. The cost of these searches varies from one Borough to the other. However, you can expect to pay a fee ranging between £100 and £200.
- Stamp Duty Land Tax
Every property buyer in the UK is subject to a land tax, which is calculated on the basis of the property’s total cost. The Stamp Duty Land tax is paid based on the tax band within which the value of the property in question lies. This tax is only applicable to properties with a valuation exceeding £125,000. Here is a breakdown of the various tax bands and the expected rate of Stamp Duty.
|Value of the Property
|Up to £125,000
|£125,001 to £250,000
|£250,001 to £925,000
|£925,001 to £1.5 Million
|Above £1.5 Million
Rates from 8 July 2020 to 31 March 2021 (England)
|Property or lease premium or transfer value||SDLT rate|
|Up to £500,000||Zero|
|The next £425,000 (the portion from £500,001 to £925,000)||5%|
|The next £575,000 (the portion from £925,001 to £1.5 million)||10%|
|The remaining amount (the portion above £1.5 million)||12%|
The current LTT threshold is £250,000 for residential properties purchased at the main rates and £150,000 for non-residential land and properties.
- Electronic ID Verification (£2 to £18)
This is the cost you incur to confirm your ID documentation and current address to your solicitor.
- Telegraphic Transfer (£25 to £45, exclusive of tax)
This is the cost that your bank will charge to transfer money from your account to that of the property seller or seller’s solicitor.
- Water and Drainage Search (£30 to £40, exclusive of tax)
This is the cost you incur to confirm that the property you intend to purchase is to sewers and fresh water systems. Although the cost varies with different water companies, it should not fall far from the £30-£40 range.
- Mortgage Handling (£60 to 80)
Your solicitor may charge you for the legal and paperwork involved in the process of setting up a mortgage.
- Land Registration (£20 to £910)
For you to be registered as the new legal owner of the concerned property, you may be required to pay an amount ranging from £20 to £910, depending on the value of the property. Here is a breakdown of what you should expect to pay for the registration of property ownership.
|Above £1 Million
|£500,001 to £1 Million
|£200,001 to £500,000
|£100,001 to £200,000
|£80,001 to £100,000
If you would like an instant property conveyancing quote, them complete our online conveyancing quote form.