WHAT HAPPENS NEXT? A COMPLETE GUIDE TO THE BUYING PROCESS
Congratulations! You’ve found your dream home and had your offer accepted...now what happens?!
In this guide we aim to take you through the whole process from start to finish. Covering everything from how the mortgage process works to explaining all that complex solicitor jargon! How on earth are you supposed to know what a certificate of title is? We aim to give you all the answers in this useful guide so that the next step in this process of buying your house is far easier to understand. Buying a house can be a stressful process however our aim is to make this as smooth and as easy as possible for you.
ID, ADDRESS VERIFICATION AND PROOF OF FUNDS Why do we ask for this? This is all to do with the anti money laundering rules we have to abide by. It is important we know exactly who is buying the property and receive ID and address verification for all parties. This can be emailed and scanned to mail@keystonepmc.co.uk ID - Passport, Driving Licence, HMRC tax coding notice or UK armed forces card. Address verification - Driving licence (if something else is being used for ID), latest council tax bill, bank statement dated in last 3 months, Utility bill dated in last 3 months, car insurance certificate and schedule or most recent mortgage statement. Proof of funds - Remember our primary client is the vendor (owner of property). We must make sure you are in a position to buy and we have a duty to our vendor to make sure we see evidence of this. This can be in the form of an agreement in principle for any mortgage finance as well as a bank statement showing the remaining deposit on account. If you have the money without using mortgage finance then we need to see a bank statement/s with 100% of the money on account.
A COMPLETE GUIDE TO THE BUYING PROCESS
CHOOSING A GOOD SOLICITOR Do not just go online and pick the cheapest! You need to make sure you go with a recommended solicitor that either someone you know has used or Keystone have recommended. We have built up a relationship over many years with both of our recommended solicitors and we know they get the job done in a professional and timely manner. In the early days of Keystone it took us years to settle on two we could trust. Both are competitively priced and great value for money. You really don’t want to get this part wrong as it could jeopardise the whole process.
MEMORANDUM OF SALE This is the first document you should receive from Keystone and it informs all parties who the vendor/seller is, who you the buyer is and which solicitor is representing them. It will also note the price agreed. Please check all of this and inform us if something is not right.
CHAINS It is always wise to know at this stage whether you are involved in a chain as this can cause delays further on down the line. A chain is basically when you are buying from somebody who is also buying a property off somebody else (up chain). Or if your purchase is dependant on someone buying your house (down chain). Here at Keystone we specialise in chains as we are experts in communication up and down a chain. It is vital to keep in touch with other agents and their solicitors and make sure everything is communicated to all parties. Don’t let being in a chain put you off, we deal with this on a daily basis – you’re in good hands.
MORTGAGE If you require a mortgage then as soon as you have agreed a price and had an offer accepted you need to make an appointment with your mortgage advisor to fully submit your application. Remember Keystone can arrange your mortgage for you. By now you may have already arranged this however if you have any problems we are a whole of market mortgage broker meaning we can often get you a better deal than your own bank for example.
SURVEY Sometimes called a “valuation”. After you have applied for the mortgage a surveyor or valuer as they are sometimes referred to, will visit the property to conduct a survey. There are three levels of survey. Speak to your mortgage advisor about these and what he would advise. This will all depend on the age and condition of the property. Most people aren’t aware that a mortgage survey is actually done on behalf the lender rather than you. In most cases they are lending the majority of the money against the house so they want to make sure the house is good security for their money in case in the future you don’t pay and they have to repossess the property.
SEARCHES It is important to speak to your solicitor as soon as possible about searches as they can take a while (sometimes up to 10-12 weeks to come back). They usually cost around £250 and are part of the solicitor’s fees you have already been quoted. Your mortgage advisor may say to wait until your mortgage offer comes back before instructing searches – please think carefully before heeding this advice! If your mortgage offer takes 4-5 weeks to come back and then you have to wait 10 weeks for a local authority search, you’ll be waiting potentially 4 months to move in! They have a six-month validation period on them so could potentially be sold onto the next buyer if something goes wrong and you end up not being able to buy the house. Searches are enquiries that your solicitor makes about the property to various authorities that hold information about the land it sits on and the surrounding
A COMPLETE GUIDE TO THE BUYING PROCESS
area. This is to make sure that nothing will affect the value of the property now or in the future. It is always a good idea to have searches and if you are buying the house with a mortgage the lender will insist on searches being conducted. To give you some idea of why searches are necessary if you choose not to have searches you could end up with the following problems. • • • • •
A house that regularly floods and as a consequence is almost impossible to insure. Someone else has left a debt secured against the house which you end up inheriting. All of a sudden a hole develops in your back garden as a result of an old mine shaft collapsing. A new road or train track is built right on your boundary. Sits on land that is contaminated.
The three main searches are • • • •
Environmental Search – highlights flooding issues, landslide issues, Subsidence issues, contaminated land issues. A word of note – Radon Gas comes up on virtually every survey in the Flintshire area. This is an area where the soil and rock formation can generate radon gas in very rare cases but this is generally a precautionary measure and I have never known anyone to find high levels. A test kit can be obtained for around £20 if you want to be ultra-cautious. Local Authority Search – Covers planning issues, Building control issues, Highways and Pollution issues. Water and Drainage Search – who owns, maintains and the locations of the sewers, drains and piping. Whether water is rateable or on a meter. Whether you would need permission from the water company to extend etc or if there is a manhole that would affect this. In the Flintshire area a mining search is also usually relevant as in the past it was a big area from mining. This is important as it gives the locations of all the old mines.
The solicitor will also do title searches - Title register – this shows all the previous owners of the property and whether any debt has been left on the property and the Title plan which shows the boundaries of the property.
OTHER SEARCHES I will keep this brief as it’s unlikely that any of these searches will be needed in the Flintshire area.. Chancel Repair Liability search - This checks if a property is liable for the cost of repairs for the local parish church. You may think this is a ridiculous scenario in the 21st Century, but plenty of people have been caught by this issue and it is estimated that around half a million properties in England and Wales could be affected, even if the liability is not mentioned in the title. It doesn’t just apply to old properties as it actually applies to the land it sits on, so whether a property is in a town or newly built, you may still be liable. Flood Risk Report – There would only be a few properties in the area at risk of flooding and if the property you’re buying is then the solicitor will have to order this kind of search. Its important to know as it can sometimes be impossible to get insurance on a property that is at risk of flooding.
THE ROLE OF INDEMNITY INSURANCE POLICIES It is possible to secure an indemnity insurance to cover either a general or a specific issue the searches have uncovered. In many cases you can successfully argue for the seller of the property to bear the cost of buying the policy. Many potential issues may never become actual problems; indemnity insurance may give you the peace of mind needed to feel comfortable purchasing a property that does come with a little risk attached.
A COMPLETE GUIDE TO THE BUYING PROCESS
What are they? General indemnity insurance policies cover a specific risk associated with the property, such as: • • • • • • • •
Chancel repair – if it isn’t clear that you will owe money at some point for the upkeep of the local church Contaminated land – this might never be an issue but, if it becomes one when you are living there, remedies may be contributed to or paid for Certificate insurance – for example, for lost building control for a new boiler, planning permission or FENSA data Debt issues – if a property has a debt on it and this is called in at a later stage Leasehold issues – such as trying to find the freeholder Party wall issues – if the current owners did work on the property and didn’t get approval from the neighbours, for example a loft extension which affects a terraced or semi-detached property Rights of way issues – often involving a legal dispute which can be insured to pay for Title deeds – these may not be easily traced, so any issues can be insured against
How much do they cost? Specific insurance can cost up to £100 while a more generic policy is likely to be £200-£300, depending on the value of the property. It is important to be aware how long the insurance lasts for – 10 years or more? And if there are any restrictions on the policy paying out? How do I know when one’s needed? It is your conveyancer’s job to advise if a policy is worth taking out. For the sake of a few hundred pounds, the recommended policy is likely to be worth paying for as opposed to risking costs which can easily run into thousands, but most importantly cause a lot of stress and hassle and ultimately ruin the enjoyment of you home.
TITLE DEEDS As your solicitor is conducting all the searches the seller’s solicitor should be obtaining certificate of ownership (Title deeds – documents that show the chain of ownership). They also should be sending out to the seller a Property information form which they complete and provides lots of vital information for you and your solicitor. This includes a list of all fixtures, fittings and any contents that have been agreed upon to be left. It will also include things like, who is responsible for fencing of boundaries, when the boiler and the windows were fitted. You need to pay close attention to this when you receive it and check everything is as expected. When all these things have been finalised the Certificate of title which is a report on all of the above and is prepared by your solicitor and passed on to your lender. This confirms that the property is of good security and there are no problems with the property.
ENQUIRIES You’ll often hear this term being expressed by either our agents or your solicitor. Enquiries can mean anything that crops up as a result of all the searches, the property information form or obtaining the title deeds. All of these need to be satisfied prior to exchange of contracts.
EXCHANGE OF CONTRACTS It is important that you obtain a quote for buildings and contents at this stage as buildings insurance should be in place prior to exchange of contracts. Keystone can help you with this – we have some great home insurance providers on our panel and can obtain a very competitive quote.
A COMPLETE GUIDE TO THE BUYING PROCESS
Providing all of the above has been conducted and both solicitors have had all of their enquiries answered then at this stage the seller’s solicitor will prepare a draft contract. The contract will have an agreed completion date inserted where the matter must be finalised by. Please bear in mind Keystone will never get involved with dates – it is only the solicitors that can set dates. It is frustrating regarding dates especially with you having to organise removals or give notice on a rental property but due to all the complexities of buying a property its virtually impossible for a solicitor to give a date until generally 2-3 weeks prior to completion. Completion is usually set for around 7-10 days after exchange of contacts but can happen on the same day! Usually at least 5 working days before completion your Solicitor will be asking you for the deposit and any other fees due such as mortgage broker fee and the remainder of their fees. This is all laid out in the form of a completion statement. At this stage they will also call for the money from your mortgage lender.
COMPLETION, THE BIG DAY! Your solicitors will, on the completion date, transfer to the seller’s solicitor’s sufficient money to buy the property. In return for the money, the buyer’s solicitors will receive the legal transfer document together with all the other relevant documents for the property. For the seller’s solicitors to authorise the seller or their estate agents to hand over the keys to the buyers it is important for the sellers to be aware that they should not authorise the release of the keys until they know that we have received the money for the property. Please be aware, the time the keys are released is down to the two solicitors involved and can be at any time during that day. Please bear this in mind when organising removals etc.
AFTER COMPLETION Believe it or not there is still work to do for your solicitor. They have a number of tasks to perform after completion including the payment of any stamp duty land tax, the registration of the property at the Land Registry and notification of the freehold owner, if the property is leasehold. This is a general guide to a basic form of transaction, which we hope you have found to be helpful. Although the administrative and legal procedures in each transaction are similar, every property is different and it goes without saying that all sellers or buyers have their own particular expectations and requirements. Our main advice is try to remain calm and patient.
WHAT TO EXPECT FROM KEYSTONE? One of our main staff core values at Keystone is communication. You will receive regular updates throughout this process and we are always on hand to help. We will be speaking to both Solicitors throughout and making sure we keep all parties informed of progress. We are currently working on a portal where all parties including the two solicitors will be able to log in and leave key stage updates. This is due to be released in May 2021. We feel this will improve things and will save a lot of time.
A COMPLETE GUIDE TO THE BUYING PROCESS
IF YOU WOULD LIKE FURTHER INFORMATION PLEASE GET IN TOUCH TODAY 01244 836 636 mail@keystonepmc.co.uk keystonepmc.co.uk