Advice Guide for Buying Residential Property
We know it’s a cliché, but the reason it’s a cliché is that it’s true – buying a property is likely to be the largest single financial outlay you’ll make so you need to be aware of the potential costs and fees involved.
Everything you need to know
Our Residential Sales team will help you to find your perfect central London residential property and then remain on hand throughout the process to ensure a satisfactory conclusion for all parties.
The property buying advice below should be treated as guide information only and it is not intended to replace professional advice. Every property transaction is different in terms of its detail and complexities and our property sales team is on hand to offer you further information and clarification.
In the financial climate we find ourselves in, many lenders require a minimum of 10% deposit of the purchase price of the property, payable upon exchange of contracts.
The legal process of buying residential property should be conducted by a qualified conveyancing solicitor and they should be instructed during the process of making offers for individual properties.
Costs vary dependent on which firm of solicitors you use, the value of the residential property and how much work is involved.
Solicitors will also add on what they call ‘disbursements’. These are additional costs pertaining to your case such as postage, filing any necessary applications etc.
Stamp Duty Land Tax (SDLT) is charged on land and property transactions in the UK. The tax is charged at different rates dependent on the purchase price of the land or property.
The rates for freehold residential property are as follows:
Up to £125,000 0%
Over £125,000 to £250,000 1% (£1,250.01 – £2,500)
Over £250,000 to £500,000 3% (£7,500.03 – £15,000)
Over £500,000 to £1m 4% (£20.000.04 – £40,000)
Over £1m to £2m 5% (£50,000.05 – £100,000)
Over £2m 7% (£140,000.07 –
A Mortgage Valuation Report (MVR) from your mortgage lender confirms the property has a market value equivalent to the amount you want to borrow and costs somewhere between £150 and £350. The majority of buyers nowadays will pay for either a Homebuyers Report costing up to around £700 or a full structural survey which can exceed £1,000 dependent on the property and how much work is involved.
Some lenders will waive application and arrangement fees but some can charge up to £1,000 to process your mortgage application. In many instances, the fee can be added to the mortgage loan amount.
It’s important to confirm beforehand whether it can be added to the loan. Additionally, check if your fee is refundable if your mortgage loan application is rejected or you withdraw from the purchase prior to completion.
Mortgage Indemnity Insurance
Mortgage Indemnity Insurance will usually be taken out by your lender (at your expense) if you have taken out a high proportion of the property value (usually 90% +) and there is a risk you may not be able to keep up repayments.
The insurance will be activated if the lender repossesses the house and has to sell it for less than the mortgage loan amount with the insurance policy making up the difference. In addition, your lender may sue you for the shortfall.
You can expect to pay approximately £1,500 for every £100,000 borrowed.
Buildings & Contents Insurance
Generally speaking, your mortgage lender will insist on the property being covered by buildings insurance so that their investment remains safe in the event of an unforeseen catastrophe.
The Clearing House Automated Payment System is used to transfer the loan amount from the lender to your solicitor and some lenders will charge up to £30 to make the transfer.
Your solicitor will do all the relevant searches on the property (e.g. Neighbourhood, Planning & Local Authority Search, Flood Risk Report, Drainage & Water Search, and Local Authority Search) and should cost in the region of £300 – £400.
To register a change of ownership for a property, the new owner must pay a fee to the Land Registry, dependent on the purchase price of the property:
|Up to £50,000||£40|
|£50,001 – £80,000||£60|
|£80,001 – 100,000||£100|
|£100,001 – £200,000||£150|
|£200,001 – £500,000||£220|
|£500,001 – £1,000,000||£420|