Purchasing a residential property
Buying a residential property is a significant investment and a huge financial commitment, especially for first-time buyers. With the right information and understanding of the process, the aspiring homeowner can avoid stress and facilitate a smooth transaction.
Regardless of the property type, the process of buying the property is largely the same. The whole process can be a bit complex, from house-hunting and finalising the mortgage to the completion of the sale.
In England and Wales, there are two types of property: freehold and leasehold.
- Freehold – These properties are usually houses where the owner owns the property and the land it sits on and has more control over property management.
- Leasehold – Leaseholds are usually flats, the leaseholder owns the flat but not the land it stands on for a finite period. The leaseholder is liable to pay ground rent and service charges.
What can you afford?
Buying a property is a considerably large purchase, it is good to figure out what you can afford to spend on the property. Before you go house-hunting, find out if you have sufficient funds to purchase the property or require a mortgage.
If you cannot afford to buy a house without a mortgage, make an application, and you will be able to borrow nearly 5 times the household income, however, the amount will be influenced by credit score and job security.
Prior to buying a property, it is best to strategise how you will meet monthly mortgage payments and what would happen if the income drops or the interest rate rises.
The purchase price of the property is not the only expense, your savings must also cover costs for stamp duty, surveys, conveyancing, insurance, mortgage costs, etc.
Documentation Required
For purchasing a property, you will need
- Proof of identity
- Proof of address
- Proof of source of funds
The process of buying a residential property
Here is a step-by-step guide to buying a residential property in England and Wales
Choose a home
Start your residential property search with online property sites or through local real estate agents. When hunting for a residential property, consider factors like affordability, location, transport links, flat or house, newly-built or second-hand, condition, living space, car parking, the scope for extension, garden, and potential drawbacks.
Investigating the title to the residential property
After you have chosen a home, the next vital step is to investigate the title to the property to reveal any defects that may prove detrimental to the property’s value in the future. Hire a solicitor to review documentation sent by the seller.
The solicitor will submit ‘searches’ to several public authorities which will take around three weeks to return. In case of any defects, the solicitor will enquire the seller and find a solution to resolve the issue.
Moreover, the prospective buyer can request the surveyor to inspect the physical condition of the property and the structure.
Exchange of Contracts
After that, prepare to sign the contract, send a 10% deposit to the seller, and fix a completion date. Both solicitors exchange contracts and both parties are legally bound to obey the terms of the contract.
After an exchange of contract, the buyer will send a legal transfer to the seller to sign and return. Likewise, the seller can send documentation to sign and demand the remaining funds.
Completion
The buyer will send the remaining funds to the seller on the day of completion. Upon receiving the completion funds, the seller will date the transfer and confirm completion.
Disclaimer:
The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Connaught Law and authors accept no responsibility for loss that may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please don’t hesitate to contact Connaught Law. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Connaught Law.
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