Frequently Asked Questions
Head of Residential Property, Sarah Avern, shares examples of some of the frequently asked questions that have been raised by her clients* during the course of their property transactions, and the advice and explanations given to them to help them understand the process of moving home.
Moving home is listed as one of the most stressful things a person will do in their lifetime, but why is this? A lot of the time it is because of being let down by a Buyer or Seller, or timescales being delayed and target moving dates missed, however it can also be due to the whole process seeming complicated and difficult to understand.
At Band Hatton Button, we always say to our clients that there is no such thing as a stupid question when it comes to Conveyancing, as after all some of us may only move once or twice in our lifetimes, and so why would this make us experts in such matters?!
Below is a regularly updated list of some of the questions we’ve received.
*names will be not be shown in full for confidentiality reasons.
There are two main stages when buying or selling a property in a Residential Conveyancing transaction.
After the purchase price has been agreed between the Seller and Buyer and the Buyer’s Solicitor is satisfied with their searches and enquiries against the property, the first significant stage that will be reached is the Exchange of Contracts. It is at this point that all parties in the chain will have agreed on the moving date, and the Buyer will have a paid a deposit of up to 10% of the purchase price. Each Solicitor will hold a copy of the Contract that has been signed by their client, and they will then date the Contracts and exchange them with one another, hence where the term comes from. It is at this stage when the transaction becomes legally binding on both Seller and Buyer – the moving date is set, and the purchase price is fixed, and should either party decide not to proceed after the exchange of contracts has taken place, they will be in breach of contract and in the case of a Buyer being in breach, would result in them losing their 10% deposit. The party who is in breach could also then be sued for breach of contract by the other party.
The next significant stage in the process is the moving date itself which is what is known as “the Completion Date.” It is on this date that the rest of the money transfer will take place between the Solicitors, and the keys will be released by the Seller’s Solicitors upon receipt of the Buyer’s funds, and the Buyer can then move into their new home.
A Valuation Report is carried out on behalf of a mortgage lender when they are assessing whether a property is suitable for them to lend the mortgage against. This type of survey is usually very basic and often consists of just one or two pages of confirmed information about the property, such as the type of property, number of bedrooms, and insurance rebuild figure. It is designed to be purely an assessment of value and condition from a lending perspective.
A Home Buyer’s survey is the most common middle of the road type of survey and is designed for properties that are generally no more than 150 years old, which are of conventional construction and in reasonable condition. The report focuses on significant and urgent matters, such as:
- Property’s general condition
- The value of the property on the open market
- Comments on matters such as whether there has been treatments such as damp proofing, insulation, timber treatment etc. carried out previously at the property
- Testing of walls for signs dampness
- Highlighting any apparent defects in the property, which may affect value
- Urgent matters that need assessing prior to the exchange of contracts.
If a property is an older or more unusual property (e.g. a listed building for example) then an even more in-depth full building survey may be recommended by your surveyor.
As a mortgage valuation report is carried out purely on behalf of a Mortgage Lender, it cannot be relied upon by a Purchaser. Therefore, if you proceed with a purchase on the basis of having had a Valuation Report only, and a defect in the property is later discovered after you have exchanged or completed your purchase, you will have no recourse against the Seller and/or the Mortgage Valuer.
If however, you have had your own personal survey carried out against the property, should defect(s) be discovered then it will enable you to obtain quotations for the cost of any repairs, and will give you the opportunity to re-negotiate the purchase price should you wish to do so. It is therefore, important that you have the result of the survey before you instruct the exchange of contracts to take place, as this is the point at which you are legally committed to continue with your purchase.
Should any issues have been missed from the survey, you would have recourse to potentially take action against your surveyor.
Yes, unfortunately up until the point at which the contracts have been exchanged between the Solicitors acting on behalf of the Seller and the Buyer then either party can pull out of the sale/purchase without any liability to the other party.
It doesn’t happen as often as people may think, however it can be extremely upsetting for the other party when it does.
There are no ways to guarantee that a sale or purchase will proceed.
As a Buyer, it is important that you have your financial arrangements in place before making your offer, and you act in a timely fashion when instructing a Solicitor to act on your behalf and also in instructing your survey and mortgage valuation to be carried out.
The Help to Buy bonus can only be claimed once a completion date for your purchase has been set. You can however, close the account at any time, and so the funds in the account can be used towards your deposit payment, however the bonus payment can only be claimed at the point of completion towards the cost of purchasing your new home.
Once you have closed your ISA account, you need to send your Closing Statement to your Solicitor, along with a ‘Help to Buy ISA Declaration’ form that they will be able to provide you with, and your Solicitor will then apply for the bonus payment on your behalf.
It is important that you allow enough time to close the account and get the Closing Statement to your Solicitor, prior to your completion date, as the bonus payment cannot be claimed after you have completed your purchase.
Some Banks and Building Societies are able to let you have the Closing Statement over the counter in branch, however some online or postal accounts will require the statement to be posted to you, which can take up to 7 working days in some cases, and so it is important to do your homework in the run up to your completion date, to ensure that you do not miss the opportunity to claim your bonus.
The minimum government bonus is £400, meaning that you also need to have saved at least £1,600 into your Help to Buy: ISA before you can claim your bonus.
Unfortunately until the contracts have been exchanged, there is no guarantee that the purchase will proceed through to completion, as it is the exchange of contracts that makes the purchase legally binding on both the Seller and Buyer. Therefore, our advice would be that you should not give notice to your Landlord until you have had confirmation that the contracts have been exchanged.
It can be frustrating as this can often mean that you need to have a longer gap between exchange and completion than you or the Seller would ideally have liked, to allow for the notice period to elapse with your tenancy agreement, however you can agree the completion date to take place whilst the notice on your rental property is running – it all depends on how much of an overlap of both the rent and mortgage payments that you can afford.
It can sometimes work to your advantage to have an overlap of both properties as you can then move between the two properties whilst your tenancy is still running, rather than to have to do all of the move on the one day.
If however, you do not want to wait until the contracts have been exchanged before handing in your notice, then you must be prepared to accept the risks associated with making this decision, and our advice would be that you should always have a “plan B” in mind, such as moving in with friends or family, should the tenancy expire before you are able to complete your purchase and get the keys to your new property. This is not of course ideal, and there will also be costs such as storage costs for your furniture to take into consideration.
Under the standard terms of a residential property purchase contract, the responsibility to insure a property after the exchange of contracts has taken place, passes to the Buyer. Therefore, you would need to ensure that you start your buildings insurance policy once you have received the call from your Solicitor to say that the contracts have been exchanged.
If however, you are purchasing a new build property then the Developer would usually retain the responsibility to insure the property until the day of completion when you will get the keys to your new property, and this will be explained to you by your Solicitor when they are going through the Contract with you.
With reference to life insurance policies, as you become legally committed to purchase the property once the exchange of contracts has taken place, it is at this point that any life insurance/critical illness policies etc. need to start so that should anything happen to you between exchange and completion, your dependants will have the benefit of the cover offered by these policies at that time and they will have the funds available to continue with the purchase if necessary.
If you are having a mortgage to assist with the purchase of a property, then yes searches are compulsory as a Mortgage Lender will require them, however if you are a cash buyer then it will ultimately be your decision as to whether you have all or some of the recommended searches carried out.
Our advice would always be to have the full set of searches that are recommended for the property and location that you are purchasing in, as after all, a couple of hundred pounds spent is a small amount in comparison to the overall cost of the property you are looking to buy, and the searches could reveal something that may change your mind about purchasing the property.
As a Buyer, you will purchase the property subject to any adverse entries or information that may have come up in the recommended searches, regardless of whether you have chosen to carry them out or now, and so there will be no comeback against the Seller if you later discover an issue with the property and/or its location, that would have come up in the searches had you have chosen to carry them out.
A property survey is not a substitute for having the recommended property searches carried out, as whilst the surveyor may comment on issues that could crop up in the search results (e.g. a risk of flooding in the area; possible historical planning issues with the property; past mining activity in the area etc.) they will only touch on these subjects, and will more than likely recommend that you have the full searches carried out in on to explore any potential risks or issues with the property in further detail.
Typically the main searches that are recommended against any property these days, are the Local Authority Search; a Drainage & Water Search; and an Environmental Search. These can be further explained as follows:-
- Local Authority Search – will cover, amongst other things, areas such as the planning and building regulations history of a property; will provide details of any enforcement proceedings outstanding against the property (e.g. a planning breach or outstanding building control issue); financial debts outstanding to the Local Authority (e.g. pest control charges; disability improvement grants); proposed improvements/alterations to the local highways; whether there are any constraints on the property (e.g. within a Conservation Area, a Listed Building, or affected by a Tree Preservation Order etc.)
- Drainage & Water Search – this search will confirm if the property is connected to the mains sewer network for the removal of both foul and surface water from the property; it will confirm whether the property is connected to a mains water supply; it will provide details of whether there are any sewers or mains water pipes which pass through the boundaries of the property; it will indicate whether anything has been built over or close to any of the sewer or water pipes; and it will confirm who owns the pipes etc. and who is currently billing the property for these services.
- Environmental Search – the search provider assesses historical land data for the land and surrounding area upon which the property has been built and based on their findings they will certify whether the land has a potential environmental risk or is risk free. This type of search will highlight issues such as risks of Landslips; Subsidence; Contaminated land due to historic landfills and waste sites; or the risk of flooding from nearby rivers or seas or other water sources.
Depending upon the property location, there may be further, more bespoke searches that your Conveyancer will also recommend being carried out against the property such as a Coal Mining Search if the property is located within an area which has current and/or historical coal mining activity; Tin mining or China clay mining (e.g. if the property is located in Devon or Cornwall for example); Gypsum mining (e.g. if the property is located within Cumbria); or a Canal & River Search if the property abuts a riverbank or canal.
Your Conveyancer will discuss any additional recommended searches with you, and the risks that have been flagged for the property being purchased, so that you can make an informed decision as to how you wish to proceed.
The Local Authority Search, which is the search that will provide the planning history for the property that is being purchased, will only provide planning information relating to that specific property. This means, for example, that if you were purchasing a semi-detached property and the adjoining property had been granted planning permission for a two-storey extension, this would not be revealed on the Local Authority search against the actual house being purchased.
If you want to find out what planning applications have been made in the local area, it is possible to carry out a Plan Search. This additional search will provide information such as decision notices that have been passed within a certain radius of the property; mobile phone masts; and even information such as crime rates and the number of thefts in the area.
These searches will not necessarily however, be able to confirm whether there are any development proposals that have yet to be submitted for planning, that could crop up at some point down the line, and so this information can often be found in the local authorities ‘local development plans’. These are not released to Conveyancers as part of the Local Authority search result, although reference is often made to their availability for inspection. We would therefore, recommend that you visit the local authority to inspect their ‘local development plan’ if you have any concerns regarding their proposals for development within the local area, particularly if the property being purchased benefits from views over or is adjacent to open land.
This will depend upon your new Mortgage Lender’s requirements, as although you already own the property and the recommended searches may have been carried out at the time of your original purchase, the results of searches are only considered acceptable for a mortgage lender where the results are no more than 6 months old at the time that the new mortgage starts. Therefore, as your new Lender will want the peace of mind of knowing that the property has been thoroughly checked as being suitable security for them to lend against, they can sometimes require a fresh set of searches be carried out against the property. There are however, a number of high street lenders that will now accept “No Searches” indemnity insurance in place of having the searches carried out.
This indemnity insurance is usually only for the benefit of the mortgage lender and provides cover against the property being affected by adverse entries that would have been revealed if searches had been obtained on the policy commencement date.
The cost of the indemnity insurance is usually considerably less than the cost of re-applying for the full searches pack once again, and so this is something that your Conveyancer will discuss with you as part of a re-mortgage transaction.
That all depends on the turnaround of the Local Authority where the property is situated, as the Local Authority Search is usually the search result that takes the longest to come back, with the Drainage & Water and Environmental searches typically coming back within 24 – 48 hours of being ordered.
These days, due to the method of applying for the searches as well as the delivery of the results, being on an electronic basis, the turnaround time of the Local Authority searches usually ranges between 7 – 14 working days.
There are however, some occasions whereby a Local Authority’s response time can extend by anything up to 6 weeks, which can be hugely detrimental to a Conveyancing transaction and the chain of properties involved.
If this does occur then your Conveyancer will usually be warned about the increased turnaround time at the point of ordering the searches, and there may be alternative options for them to consider (e.g. ordering something called a ‘Personal’ or ‘Regulated’ Search which does not come from the Local Authority, but instead is prepared by a Search Agent working on behalf of the search provider, who will visit the Local Authority’s offices and access their records themselves in order to compile the search result.)
If you have any concerns about the turnaround time of your searches, we would recommend that you discuss this with your Conveyancer so that you can agree realistic exchange and completion expectations from the outset.