The essential conveyancing process guide for buyers in 2020
We explain the conveyancing process when buying a property. Insider tips show you how to save time & money and avoid being a victim of slow conveyancing.
The conveyancing process when buying a property
In this easy-to-follow guide we set out the steps involved in buying a property.
With almost 1/3 of property purchases falling through nationally in 2017 (often resulting from delays in the conveyancing process), we offer tips on how to reduce the risk of an 'abortive transaction', minimise stress and save time and money on your home move.
Once your offer has been accepted you will need instruct a solicitor or conveyancer.
- Choosing a solicitor before you find a property to buy is a prudent. Even though a solicitor cannot start the conveyancing until you have an offer accepted, the initial formalities of setting you up as a client can be completed. Then, when you do get an offer accepted, you can get off to a flying start.
- Find a solicitor who works on a 'no move no fee' basis so if you ultimately decide not to buy you won't incur any fees
- Choose a communicative solicitor e.g. one worth a preference for email and phone communication. Ask the solicitor; if you will get their personal phone number, can you track the case online, are they open evenings etc. If the solicitor took days to get back to you with the initial quote - imagine what it will be like once you have signed up!
Read the solicitor's terms and conditions. Look for any fees that might be applied - even if your transaction is completely standard.
Provide the estate agent with your solicitors' details. Don't delay - the agent cannot send the 'memorandum of sale' to your solicitor until they know these details.
The solicitor will send you a starter pack containing their terms of engagement, a formal instruction form, a verification of ID form and a copy of the quote.
Complete the starter pack forms as quickly as possible. Your solicitor cannot do anything until these forms have been completed and returned. Many transactions get off to a slow start as a result of procrastination over completing these forms.
Upon receipt of the signed and completed forms, your solicitor will write to the seller's solicitor and request the sale pack which will include:
- Title documents
- Completed Property Information Form, Seller's Leasehold Information Form (if leasehold) and Fittings and Contents Form.
- Copy of the lease (if the property is leasehold)
Upon receipt of these documents, your solicitor will review the documents as well as asking you to read through them and raise any questions or concerns.
Your solicitor will then ask the seller's solicitor further questions (known as 'additional enquiries') about the property
Your solicitor will carry out searches which usually include:
- Local authority searches - checks local planning issues, local road and rail schemes, whether the road is adopted etc.
- Land Registry searches - these confirm that the seller is the legal owner of the property
- Water authority searches - confirm that the property is on mains water, is connected to drainage etc.
- Environmental searches - checks a wide range of environmental factors such as local contaminated land
- Chancel repair searches/indemnity policy - these make sure that the property isn't affected by an obligation to contribute to local church repairs
- HS2 search - checks whether the property will be impacted by the HS2 route
Depending on the results of the above searches, the solicitor may recommend further searches such as more detailed flood risk searches. Some areas may require area-specific searches such as radon searches in Cornwall or mining searches in Nottinghamshire.
Searches usually take around 2 weeks but can take much longer if the Local Authority is overloaded. Ask the solicitor to find out how long they are going to take. If it is more than a week ask the solicitor if they can carry out personal searches which may be significantly faster.
- Ask the solicitor if 'personal searches' are an option and if so, will they be cheaper?
- If you are not obtaining a mortgage you do not strictly have to have Local authority searches. Although searches can be informative you could save anywhere between £150 and £400 by not having them.
Your lender will require a mortgage survey. The lender's surveyor will visit the property and ensure that its value is sufficient security to cover the mortgage plus any costs they might incur in the event of a default to the mortgage.
Mortgage administration is probably the most significant factor in protracting the conveyancing process. To minimise the impact of this you should:
- Work out what you can afford in advance of looking for a property
- Decide on your preferred lender and mortgage product
- Ask your lender for an Agreement in Principle (AIP), (aka 'Approval in Principle'). An AIP is a written estimate from a mortgage lender detailing what you should be able to borrow. An AIP is not a mortgage offer. However it will provide a degree of assurance that (assuming there are no major changes in your life such as job loss) you will be able to borrow the stated amount. It also demonstrates an ability to purchase to the seller.
- If your deposit is a gift e.g. from a parent, you need to tell your solicitor and lender as early as possible. The lender will need to carry out various money laundering checks that can cause significant delays.
A RICS Homebuyer report or structural survey is carried out. The mortgage lender will probably offer an upgrade from the mortgage valuation to a more comprehensive survey.
If time is your main concern it may be advisable to go with the lenders upgrade option. The surveyor will do the valuation and Homebuyer survey at the same time.
If time is less of an issue, it would be worth shopping around for the best price for a surveyor. Surveys range from £300 to £750 for an average property.
The lender will issue a formal mortgage offer. A copy will be sent to you and your solicitor. This should be sent to both you and your solicitor. The solicitor will need to review the terms of the offer and ensure that these will be met. If there are any issues the solicitor will inform you.
Don't assume that your solicitor has received a copy of the offer just because you have. Forward a copy of your offer to the solicitor immediately upon receipt.
The solicitor will collate all of the relevant information and prepare a 'Report on Title'. This will be a bound copy of all of the information gathered to date including replies to enquiries, property information forms and searches. The solicitor will offer any advice and recommendations regarding the purchase of the property in the report.
You will be expected to confirm that you have read this report and are happy to proceed.
Some solicitors don't compile a report as such. Instead, they will send documents to you in 'dribs and drabs' - as they receive them. This can be preferable as it enables you to consider each element individually, rather than being overwhelmed by a large document in the run up to exchange.
Ask your solicitor to send you the constituent parts of the report (such as searches) as soon as they receive them Raise any questions as early on as possible. If the solicitor prefers to send a 'report on title', you should read it as soon as you can and let your solicitor know if you have any questions or are happy to proceed.
A completion date will be finalised and agreed between the buyer and seller.
You will pay the agreed deposit to the seller's solicitor. This is normally 10% of the sale price. However, it is often possible to negotiate this down to 5%.
Take out buildings insurance - this is required before contracts can be exchanged. The insurance of the property after exchange is the buyer's responsibility.
With your authority, the solicitors will 'exchange contracts'. After exchange you are legally committed to buying the property. If, for any reason, you do not complete - you will lose your deposit. You may also be sued for any losses incurred by the seller.
The seller is also legally bound to sell the property to you. If the seller pulls out you would be able to sue him also.
The solicitor will send you a financial statement known as a completion statement. This will detail how much you will have to pay to complete the purchase. The statement will also set out the solicitor's fees, disbursements, stamp duty and any other relevant costs.
Check the financial statement carefully. Mistakes are not unheard of and recovering any losses after completion will be harder than rectifying the statement beforehand.
The solicitor will 'draw down' the mortgage from the lender. You will need to transfer any remaining funds to the solicitor's account. The funds must have cleared the day before completion.
The seller will move out before the property completes.
The solicitors will complete on the purchase. You will then be able to collect the keys from the estate agent.
Many people are surprised to learn that there are a number of steps for the conveyancer to do after the property has completed. These include:
Completion of the Stamp Duty Return form and payment of the stamp duty to HMRC.
Formally registering you as the new owner at the land registry.
Registering the lender's interest in the property
Sending the deeds to the lender
Notifying the landlord or freeholder (if leasehold) of the change of ownership.
Sending you a bill for their legal fees and disbursements.
Handling any retentions for any issues unresolved during the process such as unfinalised managing agent accounts.
The home buying conveyancing process hasn't really changed in decades.
There are, however, a number of tools at a solicitor's disposal which can improve efficiency and deliver a better experience for home buyers.
The wider adoption of email, case management software systems, online searches, online files and fraud risk prevention tools have all helped bring the process into the 21st century.
Many solicitors and conveyancers have embraced these tools - others less so.
Part of the problem is down to property chains where, despite the efforts of individual solicitors to hurry things along, the process can only move as fast as the slowest cog in the machine.
Following the tips above will help ensure that you and your chosen conveyancer are not the cog that grinds things to a halt.