Are you one of the home buyers returning to the property market following months of uncertainty due to Brexit and last year’s election?
Confidence among buyers and sellers is reportedly returning, with property website Rightmove claiming that the average newly-listed home price rose £2,589 in the month to mid-February to £309,399.
If you’ve found a home that you want to buy, what are some of the key things that you need to consider and pitfalls to dodge?
What are the key things that you need to consider if you’re buying this year?
We’ve outlined six things, from whether you’re a cash buyer or need to arrange a mortgage, to budgeting for stamp duty and checking on the legal access to the property.
They apply specifically to if you’re buying a freehold property as opposed to leasehold, where a buyer ‘leases’ the property from the freeholder and needs to consider other issues outlined by clicking here.
1. Always get a survey done
Helen Marsh, a partner at law firm Forsters, always recommends having a survey done, whether buying a flat or a house.
‘This is because it will help flag up what you are taking on in terms of defects or expensive repairs – and may affect your decision to buy, or the price at which you buy,’ she said.
A survey will also highlight what alterations and extensions have been carried out to a property, something that may not be obvious to an untrained eye.
A solicitor should check that the necessary consents – such as planning permission, building regulations and possibly listed building consent – were obtained.
Ms Marsh said: ‘Without these consents, you risk enforcement action from the council for the unauthorised building works.’
She says that a homebuyers survey is suitable for most conventional properties in a reasonable state of repair and condition.
However, if there is anything unusual about the property – such as its age, size, features, or extensive alterations – a full building survey may need to be commissioned.
‘Advice should be sought from your surveyor about the different forms of survey and reporting available and you should consider these carefully as the right survey for the property may help avoid expensive remediation works after completion,’ Ms Marsh said.
Ben Johnston, from the off-market property app Houso, agreed, saying: ‘A survey is well worth paying for as it can help allay any concerns about the property you are buying.
‘If any problems are unearthed, it may not necessarily mean the end of the purchase but could give you some wiggle room to negotiate on the price so that you have the funds available to remedy any issues.’
Survey: If any problems are unearthed, it may not necessarily mean the end of the purchase but could give you some wiggle room to negotiate
2. Stamp duty
Stamp duty is payable on most property transactions, and can be a significant cost of the purchase.
‘Stamp duty can feel like a minefield and the rules get more complicated with each passing Budget,’ claimed Ms Marsh.
Some are hoping for a change in the stamp duty threshold being raised to £500,000 in the next Budget on March 11.
First-time buyers are currently exempt for purchases of up to £300,000 and pay a lower rate on purchases of up to £500,000.
Everyone else pays rates ranging from 2 per cent to 12 per cent, depending on the price of the property.
However, anyone who already owns a residential property has to pay an additional 3 per cent on top of those rates – unless they are replacing their main dwelling.
3. The legal title
The title documents will be available online and will contain crucial information about the legal rights and obligations attaching to a property.
However, this assumes the property is registered at the Land Registry – and almost all are. A lawyer will review these and advise accordingly.
Ms Marsh explained: ‘Things to look out for are restrictive covenants, which are rules imposed on the use of the property as part of a previous dealing with the property that still bind it and are enforceable by the owners of neighbouring property.’
Such covenants commonly restrict the right to build or make alterations, or to use the property for anything other than as a single dwelling.
Sometimes these covenants are purely historic, and not capable of enforcement.
Ms Marsh said: ‘They can give an interesting picture of the area in the 19th century.
‘For example, the covenant in parts of Notting Hill not to keep pigs at the property dates back to the time when that area was a slum, and poor families shared their homes with their animals. ‘
The title will also reveal if there are any rights over the property in favour of other people.
For example, your neighbour may have a right of way through the middle of your garden, to access their own property.
You need to make sure that you can freely access the property. Most houses join a public road, so this is not an issue.
However, sometimes there is privately-owned land between the public road and the property, and this is not always immediately obvious from inspection.
Your solicitor should carry out searches to check that there is access from the public highway, and that the property has the benefit of all necessary rights over any privately owned land.
Perhaps the worst case scenario is a random strip owned by a third party, which may then be blocked up, making access impossible.
Property power: Some hope for a change in the stamp duty threshold being raised to £500k in the next Budget on March 11
5. Cash purchase or mortgage?
If you need to borrow money to buy the property you need to consider applying to a lender for a mortgage.
While you may be comfortable with some of the issues that arise from your survey, or legal title review, your mortgage lender may not agree – and could ultimately refuse to lend you the money.
Your solicitor can advise you of anything they find that would make it hard to satisfy the standard mortgage lender requirements.
Mark Harris, mortgage brokers SPF Private Clients, said: ‘It has never been a better time to borrow money to buy a property, with mortgage rates at near-record lows.
‘That said, the lender will want to ensure that the property is worth at least the amount you wish to borrow and also that you are a good credit risk to ensure that it gets its money back at the end of the mortgage term. ‘
Unfortunately, fraud is an issue in property, with fraudsters able to impersonate the true owners and ‘sell’ the property, disappearing with the proceeds of sale before the fraud is discovered.
Your solicitor will be well aware of this issue, but it is good for you to be on guard also.
Ms Marsh said: ‘Higher risk signs include unmortgaged properties, rushed transactions, overseas sellers, and sellers with little knowledge of the property.
‘To protect yourself after completing the purchase, make sure you register for the Land Registry’s property alert service so that you are automatically notified of any applications are made to change the title register.’