by Tony Lilleystone, Legal Manager
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Buying a property can be a costly venture so it is best to go into it fully aware of what exactly you will be spending your money on!
This article will set out the main disbursements that are involved during the conveyancing process when buying a freehold or leasehold property.
As Home Information Packs have been abolished, it is now the responsibility of the buyer to pay for local searches. The two searches which should be carried out in all purchases are the Local Authority and Water and Drainage Searches.
Other searches that your conveyancer or solicitor should consider are, Environmental, Coal Mining, Chancel Repair Liability and Commons Registration. These special searches will depend on they area in which the property is situated and the list is not exhaustive. Click here to read more about searches.
Stamp Duty Land Tax (SDLT) is a tax which is payable to HM Revenue and Customs when you purchase a property. The tax thresholds are as follows:
0-£125,000 = 0%
£125,000 - £250,000 = 1%
£250,000 - £500,000 = 3%
£500,000 and upwards = £4%
First time buyers do not have to pay tax if they are buying a property for £250,000 or below. There was talk of the Tories scrapping this concession but it is to remain for the time being. There are plans to introduce a new tax band next year for homes worth £1,000,000 and over, at a rate of 5%, however, it is not definite as to when this will happen.
A home buyers report or a full building survey should be carried out when buying a property.
This is a bank charge and relates to the fee payable when the purchase monies are sent to the seller’s solicitor or conveyancer on the day of completion. It will vary depending on the bank your conveyancer uses.
Bankruptcy searches currently cost £3 per name searched. A bankruptcy search must be carried out by the buyer’s solicitor before exchange of contracts to ensure the buyer is not bankrupt. This is also a requirement of the lender, if a lender is involved. Separate searches must be carried out for each co-buyer.
An OS1 search is carried out before completion takes place and currently costs £6. By undertaking this search, protection is given to the buyer or lender pending registration of the new ownership. Protection afforded by the search lasts for several weeks. Note if registration of new ownership has not taken place by the time the search expires, a new search will have to be undertaken.
When the buyer completes the purchase their conveyancer will submit an application to Land Registry to register their new ownership. The Land Registry fee for processing the application will depend on the value of the property. The fees are currently as follows:
0-£50,000 = £50.00
£50,001 - £80,000 = £80.00
£80,001 – 100,000 = £130.00
£100,001 - £200,000 = £200.00
£200,001 - £500,000 = £280.00
£500,001 - £1,000,000 = £550.00
£1,000,000 and over = £920.00
When buying a leasehold property all of the above disbursements will apply but there are a few additional disbursements that may be payable.
Under the Lease the tenant is almost always required to serve Notice of Transfer or Charge on the Landlord or Managing Agents and there will be a fee payable for this. Fees will vary and the amount payable will either be in the lease or the Managing Agent’s pack.
The Lease will require that Notice is given when there has been a change in ownership or a new mortgage has been taken out.
A deed of covenant may have to be entered into by the new buyer in which case a fee may be payable to the Managing Agents or the Landlord for processing it. Again the fees for this will vary.
Your conveyancer must carry out searches with Companies House (or another organisation who can undertake these types of searches) to ensure the Managing Agents or any other companies involved, are solvent. You can obtain this information from Companies House and their fees will depend on the information you require.
Your conveyancer will advise you of any other disbursements that may be payable on your leasehold purchase, but these are the main ones.
Fridaysmove have extensive experience in dealing with all types of residential conveyancing matters.
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