| Index »Top Tips - Buying A Property |
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| Top Tips - Buying A Property |
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| Buying Your Own Home |
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| Buying your home is probably the biggest financial decision you will ever make.So take time to consider whether it is the right choice for you
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| What Costs Are Involved? |
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| You also need to take the following costs into consideration:
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Mortgage repayments |
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Mortgage protection insurance for if you fall ill or lose your job |
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Life assurance to enable your family to pay off the mortgage if you die |
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Building Insurance as it is a condition that lenders lay down. |
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Contents insurance against the risk of theft, fire, flood or other accidents |
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Council tax and water charges
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Gas, electricity, telephone, etc
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Ground rent and service charges may apply
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| The process of buying a house is also costly, as you may need to pay for:
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A solicitor or licensed conveyancer
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An independent survey
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The mortgage to be arranged
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The Land Registry fee
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Stamp Duty
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| First Time Buyers |
| Over the past few years, the property market has been moving very fast and has led to significant increases in property prices. This has made it very difficult for many people to afford to buy a home. This is a problem particularly faced by first time buyers, as although they may be able to raise a mortgage, this will often fall far short of the cost of a property.
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Getting On The Ladder |
| It is, however, still possible for first time buyers to get onto the property ladder and there are actually some advantages to being a first time buyer: |
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First time buyers are more appealing to sellers are they are not in a chain (that is they are not part of a long list of people all dependent on each sale in a chain going through on time)
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First time buyers are much sought after by mortgage lenders
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| Judging by the headlines, you could be forgiven for thinking it's all doom and gloom for today's first-time buyers. But there are ways to make it more affordable, such as buying with a partner or friends.The obvious advantage of buying with someone else is that it allows you to buy a bigger and possibly better home in the area of your choice. However, it's always advisable to rent together first for at least six months first; if there are too many disagreements, it's much easier to walk away from a tenancy agreement than a joint mortgage.
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| No matter how well you get on with your co-owner, there are risks to be considered. If one of you can't meet your obligations, it will fall upon the other(s) to make up the balance of mortgage payments. You must also consider what you'd do if either of you couldn't work due to illness, lost their job, wanted to move out, or died. You should seriously consider taking out private health insurance or critical illness cover. It is also worth drawing up a legal contract to cover any eventuality.
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| The first practical step to buying a property is to decide on the where you want to live. Then you investigate the properties on sale in the area you're interested in through the local estate agents. Hopefully you can afford the area, otherwise you will have to find another area. You register with an estate agent and they make a note of your requirements. They should be able to immediately provide a number of house's details for you to look at. Once you have selected one or more properties of interest they will arrange with the property owner for a mutually convenient time for you to view the property.
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| Once you have identified a property you wish to buy, you instruct the estate agent to convey your desire to buy. Remember to stipulate that your offer is subject to survey and contract. Under British law, until contracts are exchanged, either party can amend or withdraw from the sale. It normally takes 6 weeks from submitting the offer until the contracts are exchanged. The time from 'exchange of contract' to possession of the property can vary as it depends on either party's wishes. This plays out up and down the line of property owners and is called a daisy chain.
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| Be warned though, that in England during boom periods, "Gazumping" is a common occurrence. "Gazumping" is the practice of a seller agreeing to an offer from a buyer, but then accepts a higher offer from another buyer later. Gazumping does not happen in Scotland as once each party has agreed to the sale, neither party can withdraw.
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| BUYING TIPS
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| The area where you live will be at least as important as the property itself:
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Explore the whole area, not just streets you might live on. |
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Visit at different times - is it a quiet road at 6pm but full of noisy people when the pubs close? |
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Look at local crime figures.
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Does the local council deliver good and valued services? See how their performance measures up.
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Ask residents for tips, advice and grass roots opinion using our conversations message boards.
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Read local news stories online.
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Make a list of the pros and cons for each area.
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Decide what your deal-breakers are. The local school or transport options may be key.
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Get a full picture of the local property market with a property report.
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| Think Long Term |
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Check with the council's planning department for details on any proposed developments in the area.
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Compare mortgage deals: make sure you get an option that will work for you long term.
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| Viewing Properties |
| It's important that the estate agents regard you as a serious applicant. Show willing and be eager to view, and you'll be top of the list when something new comes on the books. Call them regularly - they'll think of you first when a property comes on the market.Many estate agencies now have their own websites, where you can browse available properties. Be aware, however, that many don't update their sites as often as their shop windows.
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| Here are some useful tips to keep in mind when looking for the house of your dreams:
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View the properties as soon as possible. Leave it too long and you could lose the house.
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Make good use of your lunch hours or make appointments on the way to and from work.
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If two of you are buying and you have children, decide which one of you will be the chief viewer, whose job it is to weed out all but the strongest candidates.
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Don't be afraid to make numerous visits with tradesmen to find out what you're letting yourself in for.
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Check the history of any scruffy - and therefore cheap - property. If it's been rented it may have had a succession of landlords, all of whom may have done the bare minimum in repair and upkeep.
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If you're tempted to buy a run-down property to renovate and sell on, check how long it's been on the market. If it's been there a long time, it suggests there isn't a lot of profit to be made. New carpets, bathrooms and kitchens can be signs of a superficial renovation that is hiding more serious work to be done.
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| Putting In An Offer |
| It's human nature to try to strike a deal, but if you find your ideal home and it seems to be priced correctly, consider offering the full asking price. This means you'll be taken seriously, there won't be any time-wasting and it will lessen the possibility of another party stepping in All offers should be made with the stipulation of taking the property off the market. Getting a 'Sold' board outside is a good way to dissuade others from looking.
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| Chains |
| Most house are sold as links in a chain but, unfortunately, one in three property chains fall apart. This can happen for numerous reasons, from one party not having their finances in order, to an unpleasant surprise in the survey.
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| Under present British house-buying and selling practice, little can be done to alter the process, although the Government's legislation will require home owners or their selling agents to provide a Home Information Pack (HIP) to prospective buyers on request. The best way to ensure a chain progresses smoothly is through good communication. Stay in regular contact with your solicitor and estate agent to make sure everything possible is being done to speed things along.It can also help to stay flexible. Be prepared to move in with your family or rent as a short-term measure if it means you can keep the chain going.
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| Gazumping |
| Gazumping is where the seller has accepted your offer but then takes a higher one. The Estate Agent is legally bound to pass on all offers to their client, the seller and of course the higher the offer the bigger their commission... They may even pretend there's been a higher offer at a crucial moment just to see if you'll raise your offer... Under the Estate Agency Act, estate agents are obliged to pass on all offers they receive, although a determined buyer will probably go straight to the vendor.
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| There's little you can do to repel a determined bidder, but there are ways to lessen the chance of it happening, or at least reduce the impact if it does:
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Offer the full asking price and request the property be removed from the market.
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Be flexible with the vendor and don't quibble over minor points.
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Make it clear you're willing to complete on their timescale, not yours.
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Be nice to the vendor - if you've established some kind of relationship with them, it should be harder for them to let you down.
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| Submitting Offers |
| An estate agent is obliged to submit all offers to the seller up to exchange of contracts unless specially instructed, in writing, by the seller not to do so.Sometimes, more than one offer is received on the same property. When this happens, we submit all other offers to the seller, even after your offer has been accepted until contracts have been exchanged and the deal becomes legally binding. But as the buyer, we'll advise you of the existence of any other offers made, and the action you may want to take.
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| Accepting Offers |
| It is the seller who accepts or declines any offer. At any time right up to exchange of contracts either the seller or buyer is legally entitled to change their mind. It's up to you, the seller, to decide whether to accept an offer. There is nothing more frustrating than receiving an offer on your property, then finding out later that the buyer doesn't have the necessary money to go ahead, or there's a long chain which will delay your move.
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| Budget |
| This is the largest sum you are ever likely to spend on anything - until the next time you move. So, work out exactly how much you can afford to spend. Remember to leave cash for: stamp duty, the solicitor, the structural surveyor, land registry fees, local authority searches, the lender's legal fee, the lender's survey, the removal company and any immediate works that your surveyor advises (or mortgage company insists) should be done. Buying a property always turns out to be more expensive than it appears at first. It is best to overestimate the cost of everything by at least 10%-20%. Be prepared for costly surprises - for instance, the vendor might take away essential light fittings that will have to be replaced before you can move in.
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| Arranging A Mortgage |
| A conditional offer will give you a head start.Find out how much you can afford. Ask your bank, building society or other lender just how much money they will lend you and the deals they have on offer. , ensure that they make you an offer in writing: proof that you have finance in place will make you more attractive as a buyer to vendors.
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| Stamp Duty |
| Stamp Duty is the tax you pay when you buy property or shares. You pay 'Stamp Duty Land Tax' when you buy property and either 'Stamp Duty' or 'Stamp Duty Reserve Tax' when you buy shares.
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| Stamp Duty Land Tax WhenYou Buy Property |
| You pay Stamp Duty Land Tax on property like houses, flats, other buildings and land. If the purchase price is £125,000 or less (effective 23 March 2006), you don't pay any Stamp Duty Land Tax at all. If it's more than £125,000, you pay between one and four per cent of the whole purchase price, on a sliding scale.
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| Residential property - purchase price |
Rate of Stamp DutyLand Tax |
| up to £125,000 |
0% |
| £125,001 - £250,000 |
1% |
| £250,001 - £500,000 |
3% |
| £500,001 or more |
4% |
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| Your New Home
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Buy a title plan and property register and for houses you're interested in before you make an offer (£2 each). A plan defines the property and a property register tells you who owns the house, the price paid, any loans secured against it and any rights of way across the land.
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Compare deals on home insurance for your new property
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Always get the best possible survey.
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Double check that any building works such as extensions have the correct planning permission and conform to building standards
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If you have a car, check on parking permission.
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Find out all you can about your neighbours from the vendors.
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| HOME INFORMATION PACK (HIP)
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| All home owners in England and Wales need to prepare a Home Information Pack (HIP) before putting their home up for sale. The Home Information Pack will make home buying and selling faster, simpler, and easier to understand.
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| Benefits
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| The benefits Home Information Packs bring to Industry
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Improving the process of buying and selling by reducing the number of transaction failures and reducing the time taken between offer and acceptance;
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Improving the condition and sustainability of housing stock - Making a positive contribution to the condition and sustainability of the housing stock - by ensuring home buyers and sellers are aware of the true condition of the property;
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A step on the ladder for new generations of home owners - through more affordable entry costs and simpler process for first time buyers;
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Training for the qualification in Home Inspection, for those wishing to add the qualification to their existing portfolio and for those looking to train in a completely new career;
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Joined up processes through industry forging links to provide a seamless service to consumersHome Information Packs will be mandatory from 1 August 2007 and will include Energy Performance Certificates, searches and other legal documents. The Home Condition Report will remain part of the Pack but as an authorised document rather than a mandatory item.
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Currently, one million pounds a day is wasted on failed transactions and buyers often spend hundreds of pounds on valuations, legal advice and searches on transactions that ultimately break down. By providing key information at the beginning of the process, Home Information Packs will speed up the process, prevent waste and significantly cut the number of sales that fall through.
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The average home owner would save around £300 in fuel bills by making their home more energy efficient.
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Our homes account for 27% of the UK's carbon emissions contributing to global climate change.
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Nearly 30 per cent of transactions collapse after terms have been agreed.
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Over 40 per cent of transactions collapse because of an unfavourable survey or valuation inspection, so property condition is a major reason for failure.
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Currently only two per cent of buyers have a full structural survey carried out when buying a home.
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Only 20 to 30 per cent of buyers carry out a survey at all - that`s seven out of 10 people who do not.
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| INFORMATION FOR BUYERS IN RELATION TO HIPs
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| What Do I Need To Do?
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| You should ask to see a Home Information Pack whenever you are interested in buying a property. The seller must have commissioned a Pack by the time a property is put on the market.
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| Your Pack must contain:
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An Energy Performance Certificate
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An Index of contents
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A sale statement (summarising terms of sale)
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Evidence of title
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Searches
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Leasehold or commonhold documents where appropriate.
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The Index should explain the reason why any of the required documents are missing. The Pack can also include other information that would be of interest to buyers - for example, a Home Condition Report, other searches, and any guarantees and warranties on the property.
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The Pack might also contain a legal summary, and answers to standard enquiries made of sellers.
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| How Do I get A Pack?
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| Interested in buying a property? Just ask whoever is advertising it for sale for the Home Information Pack. This is usually an estate agent, but could be another business or individual. If it's an estate agent, they must give you a copy of the Pack free of charge (although they may make a reasonable charge to cover the costs of copying and posting it). If the seller isn't using an estate agent, you should be able to get the Pack directly from them.
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| Questions I Need To Ask
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| What Does The Energy Performance Certificate Say?
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| Check the energy efficiency rating given by the Energy Performance Certificate. It will have useful advice on any improvements that can cut fuel bills and boost the energy efficiency of the property.
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| Is There A Home Condition Report In The Pack?
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| If your seller has commissioned one, a Home Condition Report will contain useful information on the property's condition. These are currently voluntary, so there might not be one in your Pack.
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| Is There A Legal Summary?
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| Some Packs come with a legal summary, providing the most important information from its legal contents.
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| Are the searches and, in the case of leasehold/commonhold properties, the necessary documents included?
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| These items are not always easy to obtain quickly. The Index should explain why any of the compulsory documents are missing.
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| How Much Will It Cost Me?
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| If you're a buyer, nothing: you'll get a copy of the Home Information Pack free on any property you're interested in. However, a reasonable charge may be made for copying and posting the pack. With Home Information Packs, the overall costs of buying and selling a home will be similar to the costs before the introduction of the Packs, but will be spread more evenly between buyers and sellers.The Energy Performance Certificate is a compulsory part of the Pack, and is paid for by the seller.
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