A Guide to Buying a Property in the UK
Our experienced property team has dealt with many hundreds of purchases on behalf of people looking to buy a new home in the UK. Our property lawyers consist of native Cantonese speakers and Mandarin speakers and have a vast amount of experience in dealing with buyers who have their source of funds and documentation from overseas.
Freehold or Leasehold Property?
When you are looking at purchasing property in the UK; the first most fundamental question you should ask yourself is should I buy a Freehold or Leasehold property. Put simply, if you buy the freehold it means that you own the property and the land it’s built on until the end of time (or until you decide to sell it).
If you buy the leasehold, you will own the property for a set period of time, but you will not own the land it’s built on. As well as this, there is a lease agreement between you as the tenant and the landlord, who owns the freehold. This will set out both parties responsibilities during the tenure of the lease. A leasehold will often come with additional charges such as a service charge and such properties are usually flats within larger building complexes.
As no two purchases are the same, in our experience it is always hard to predict exactly how long a transaction will take to complete. However, below we give you an indication of the process, and what we as your Solicitors will do once instructed to bring the matter to completion.
Stage 1 - Taking Instruction and Due Diligence
We will need to take formal instruction from you and undertake due diligence as to the source of funds being used to buy the property. In simple terms, this is your way of proving the source of the funds being used to buy the property are genuine and legally made. We are used to dealing with source of funds which are being given by gift (i.e. from parent to child) or which can only be proved with analysis of Chinese-language documentation.
Note: unless you are a cash buyer, it is likely that you will need a mortgage. It is therefore important that you approach a lender to get a mortgage decision in principle. This will not bind you to this lender, but it will give you an indication of the amount you will be able to borrow and subsequently give you an estimate for the price range of property you will be able to afford.
Stage 2 - Contract Pack
The Seller's solicitor will circulate what is known as a "Contract Pack" to us. This will be a folder of documents which includes the draft contract, title documents for the property, property questionnaires filled out by the Seller (including a list of the fixtures and fittings they will be including in the sale) and other important documents relevant to the sale.
If the property is a leasehold then the Contract Pack will often give us the required details about service charge payments, building's insurance, ground rent (if applicable). This usually takes a little bit of time to be issued (on average 2-3 weeks).
Stage 2 - Raising Enquiries
This is a vital stage in the process. In the UK, there is a principle known as ‘caveat emptor’ (buyer beware). This means that it is the buyer’s responsibility to investigate the property to ensure it is fit for purpose. For this reason, we will review all the information provided by the Seller and produce a list of follow up questions and request, if necessary, further documents be provided. For instance, perhaps they have not provided evidence of planning permissions for renovation work or have not been clear about whether they are up to date with service charge payments. This process helps to ensure all aspects of the purchase are sound and there are no legal issues which require resolution.
As part of this process, we will also review the search reports which we have commissioned (i.e. environmental search, drainage and water search). If there are any potential areas of concern flagged by the reports, we can ask relevant questions of the seller in our enquiries
Stage 3 - Property Report
Once the Seller has satisfactorily answered all of our enquiries, we will produce a Report on Title for you. This will summarise all our findings and will allow you to decide whether you still want to proceed with the purchase. We would normally aim to complete the Report on Title within 2-3 working days of receiving all responses to enquiries from the Seller.
At this point, we would look to organise a face to face meeting with you so that we can talk through the Report on Title, sign any documentation required, and to discuss dates for exchange and completion.
Stage 4 - Exchange of Contracts
You may have heard the term "exchange of contracts" before, perhaps, without ever appreciating exactly what it means. In the property process, it is the point where the buyer and seller's lawyers confirm their respective client's willingness to enter into a binding legal agreement. It is called an exchange because the lawyers, literally, exchange their client’s signed contracts with each other.
At exchange, the buyer and seller agree on a date to complete. This is often about 10-14 days after exchange but can be more and can be less (in some cases they are done simultaneously). This certainty of a completion date gives both sides the time they need to prepare for the completion date i.e. book removal vans, notify utility companies etc. safe in the knowledge that the sale/purchase is legally binding.
To provide security to the seller, at exchange, a 10% deposit is usually required to be sent by the buyer (held by the seller's solicitors).
Stage 5 - Completion
Completion of the transaction is confirmed by the receipt of the purchase money in the Seller's solicitor’s bank account. The funds are sent between the solicitors so you will have sent us your completion funds a day or two before the completion date.
Once the seller's solicitor confirms receipt of all the funds, they will authorise the estate agent to release the house keys to you. The property will then be all yours!
Stage 6 - post-completion
We will pay Stamp Duty on your behalf to the UK tax authority. We will of course confirm how much is required well in advance so you can prepare the funds accordingly.
we will register the property purchase with the UK Land Registry who will then update the public records (known as the title register) and which will then show you as the owner of the property.
If you have any queries about the process of buying property here in the UK, please contact us to speak to one of our experts. We will also happily give you a no obligation quotation.
