Take note that different systems of real

Take note that different systems of real estate property transaction apply in different parts of Great Britain. This post applies specifically to England and Wales. A different system operates in Scotland.

Selecting property in England is not for the faint-hearted. The real estate laws, which seem to come from another era, permit both client and seller to re-negotiate as well as walk away from deals even after offers are generally made and accepted, virtually right up to the last minute.

Why Bother?

Provided the warning above one might well ask why bother? Well, in order to live in England you don't have much selection.

But there might be another reason. According to administration Land Registry figures, real estate costs have more than doubled in the past 6 years (to Oct 2006), and in spite of recent interest rate increases housing pumpiing shows no sign of abating.

This is because demand for housing continues to outstrip supply. The U. K. remains a high immigration country and more individuals are getting divorced (creating more households).

Additionally, as affordability becomes more difficult for first-time buyers coupled with insufficient cost-effective public-sector rental accommodation, demand is definitely increasing for privately rented real estate.

Types of Property The types of property for sale in England are not dissimilar to those inside North America, though the naming differs. Here is a brief guide to the most common types:

Unattached - the house occupies an entire building. Semi-detached (duplex) - a single constructing consisting of two houses. Terraced (town house) - a number of houses in a very row. Bungalow - a single-story house. Flat - apartment. The definition of apartment is also being used increasingly in britain. Flats may be of two varieties: Purpose-built flats were built to be taken as flats. Conversions - These kinds of exist within large houses that have been converted from single units to a number of flats.

Types of Tenure

Freehold - Mainly relates to houses. The owner owns both the structure and the terrain it occupies.

Leasehold - Primarily relates to flats. The owner "owns" the structure, but the land is held by someone else, the "landlord". Leasehold property is leased for a set period, often 99 years. At the end of the lease the property reverts towards the landlord. Beware of buying leasehold property or home with less than 50years remaining relating to the lease. Often a charge for "ground rent" is payable.

Commonhold - A comparatively new form of ownership in which owners involving individual flats share the freehold of the entire building (and land). Commonhold properties may employ a experienced management company, or may be self-managed by the individual owners. Self-managed attributes usually have cheaper management fees, nevertheless owners may be expected to "volunteer" regarding gardening, painting etc, and this can cause friction between owners depending on the quantity of work they feel they tackle.

Arranging Finance

The UK has no shortage of choice of mortgage deals, including a wide array of investor mortgages (known as "buy to let"). A properly qualified and licensed independent mortgage broker should be able to direct you through the maze.

Before consulting a dealer it helps to make some decisions in connection with kind of mortgage you require, eg set or variable rate, special functions like early repayment or overpayment facility etc.

Choosing a Property

Picking a property in England is much the same as picking a property anywhere else. First decide on site, type of property and budget. Produce a prioritized list of desirable features. It can possibly help to get a mortgage agreement within principle (ie the lender will point out how much they are prepared to lend you) to show sellers you have the obtainable finance.

Approach all suitable auctions (realtors) with your requirements. Realtor service fees are paid by the seller, thus there's no restriction how many you contact. Many (but not all) brokers publish their listings on the Web.

Think of also the growing number of "for sale by owner" Web sites used by sellers wishing to avoid agent's costs.

Traditionally, the majority of transactions have been worked on by agents, but with the growth belonging to the Internet the "for sale simply by owner" route is set to become significantly common.

Consider also property auctions. See below for more details on this alternative.

Take your time to get a feel for the market, particularly if you are unfamiliar with the vicinity. View several properties, comparing the price and what's on offer for each. Most significantly check the prices that properties possess actually recently sold for. This is a considerably more accurate indication of market value compared to seller's asking price.

The Purchase Method

The purchase process begins aided by the making of an offer to the owner. In England offers are often made orally via the estate agent and often don't add the number of "subject to" statements standard in North America, and significantly may usually include completion and control dates!

There may well be some negotiation and counter offers before arrangement is reached. In any case all offers to buy should be made "subject to inspection (survey) and contract".

Check up

Once an offer is accepted you'll likely wish to arrange for a property inspection (survey). Different levels of inspection are available. Should you be buying on a mortgage the lender will definitely require a valuation to be carried out to protect the capital in the event of default.

The lender's inspector (surveyor) may also offer to handle more detailed inspections (at extra cost) or you may wish to shop around or make use of an inspector on personal suggestion. Be sure to check their qualifications and professional body memberships.

A value merely consists of the inspector's opinion of the market value of the property. Simply no details are included. A "Home Buyer's Report" is the next a higher level inspection. The inspector will make a detailed inspection of the property and still provide a report of around 20 internet pages highlighting potential problems. The home potential buyer's is usually based on a visual inspection in conjunction with the inspector's experience and does not bring any guarantee in the event of problems that weren't identified.

The most comprehensive inspection could be the full structural survey. This does include things like certain tests and it is possible to sue the inspector in the case of complications found later that should have been known to be but were not.

There may also be a need to obtain specialized inspections, eg meant for electrical or plumbing installations. This particular need may be highlighted in the general inspection, from information communicated with the seller, or your own observations.

Within the light of the inspection(s) results you might decide to go ahead, walk away, or re-negotiate price taking account of needed repairs.

Renovation (Fixer-Uppers) Be aware that building contractors and engineers in England don't come cheap, and are of variable top quality and efficiency. If you do decide on experienced renovation be sure to get several detailed quotes for each task. Don't necessarily take the cheapest, instead select the one which will do the best job for the money. Choose an established and experienced tradesman, preferably one that has been personally recommended. Avoid entertain unsolicited canvassers.

Unless you offer an aptitude for DIY, or have possessed recommendations of competent, reputable, in addition estate agents cheap to AFFORDABLE professionals, fixer-uppers may be very best avoided.

Conveyancing

Conveyancing is the lawful process of transferring ownership from owner to buyer. It is conducted by the lawyer (solicitor) or licensed conveyancer.

Most High Street solicitors should be able to undertake this work, but quality of service can differ enormously. Get quotes from quite a few, including details of what they will do fro their fee. As always, personal suggestion is a useful guide.

Many conveyancers work on a fixed fee plus fees of the various "searches" they undertake.

Searches will invariably include a community authority search, which will reveal in cases where any building works are planned that might affect the property concerned. Other searches may be requested as necessary in line with the type of property and location.

At some point within the conveyancing process you will receive a statement from your lawyer, been completed with the seller, which details all accesories and fittings that are being included in the invest in (and those which are not) along with other important information about the property. This form should eventually form part of the contract regarding sale, so check it diligently.

It helps to choose a local conveyancer so that you can call into their office frequently in the case things do not move as quickly as will need. One disadvantage of the fixed cost system is that lawyers may be keen to do the bare minimum (since they get paid no more for extras). Continue to keep hassling them until completion is normally reached.

Once the inspection, searches and so forth have been completed satisfactorily a draw up contract will be issued to shopper and seller formally stating information on the sale. Buyer and seller both sigh identical copies of the same file and return these to their respective lawyers. The lawyers then say yes to "exchange contracts". A deposit (usually 10%) is also payable. It is only at this stage how the completion date will be fixed! Additionally it is only at exchange of contracts that buyer and seller pass the point of no return, or at least leave themselves liable to legal action should they attempt to back out of the deal.

Buying at Auction

Buying by auction can be a means of achieving a rapid purchase, and also getting a bargain to boot.

A successful bid at auction creates a contract to purchase with no going back simply by either side, so it is essential to carry out any inspections / legal queries etc ahead of the auction itself. Therefore of course that unsuccessful bidders will probably have spent significant time and money for no purpose.

Take time to peruse the list of properties coming up for auction, these are published by auctioneers in addition to estate agents or see the Web sites here. Make arrangements to view those that seem most likely, then proceed to get an inspection and even legal checks done on all those you want to bid for.

Tip: check out a few auctions beforehand for a dried up run before bidding for a real estate just to see how things work.

It's possible that the seller may just want a quick sale, but beware that it's generally problem properties that end up in auction. These may include re-possessions that have been trashed by evicted former owners, properties in very poor states of repair etc. Be sure to do your homework, and if you intend to bid on a property set the maximum figure to which you will go - and stick to it!

Costs of Purchase

The costs of purchase range from the following:

Stamp Duty (tax):

for properties up to 125, 000, seal of approval duty = 0%;

for qualities over 125, 000 and up in order to to 250, 000, stamp obligation = 1%;

for properties more than 250, 000 to 500, 500, stamp duty = 3%;

intended for properties over 500, 000; seal of approval duty = 4%. Bizarrely the pace quoted is payable on the ENTIRE price, eg a house priced 251, 500 is liable for 7, 530 stamps duty, whereas one at 250, 000 is liable only for 2, five hundred. It follows that it is very well well worth negotiating a reduction to take a property just below a stamp duty threshold.

Attorney fees - generally consisting of lawyer's price plus those of any searches carried out

Land registry fees

Valuation/inspection (survey) fees

Mortgage "arrangement" fees (essentially points, an up-front payment in substitution for better rates)

Chains

A chain is to try and wish to buy a house from Mister A, but Mr A is usually waiting to buy a house from Mister B, and Mr B is certainly waiting to buy a house from Mister C etc. In view of the later stage of fixing a finalization date chains occur all too often in English real estate transactions.

A possibility to avoid getting caught in a cycle is to limit your search to real estate listed as "no chain" or perhaps "vacant possession" (unoccupied). It is also worth getting your lawyer to confirm this within the conveyancing process.

Gazumping and Gazundering

As we've already said typically the English real estate system is fraught using frustration as buyers and sellers may modification minds or walk away right up towards the last minute. Two common reasons for accomplishing this are "gazumping" and "gazundering". Even though it's hopes that readers would not encounter them it's worth understanding them here.

Gazumping is where some sort of seller accepts one offer but keeps marketing the property and eventually welcomes a higher offer. The maker in the first offer is left out of pocket to the tune of home inspections, legal fees, and mortgage fees received to date.

Gazundering is where a shopper, having had one offer accepted, eventually makes a lower offer. This may be genuine, in the light of faults diagnosed on inspection, or may be relying on pure greed arising from the seller's need to sell quickly.

Home Data Packs

In an attempt to partially address typically the inefficiencies of the English real estate method the U. K. government has introduced "Home Information Packs" on much larger properties from August 2007, using properties set to follow some time down the road. This means potential sellers have to put together a set of documents providing certain information about the property.

Since Home Information Features are paid for by the seller it appears likely they will deter those who basically market their home to ascertain its market value. They also give the buyer more information compared to was previously available before s/he decides to make an offer.

However, since accounts are compiled by someone working for the seller, can buyers and their lenders trust the impartiality of the information? In addition, last minute gazumping, gazundering or additional changes of heart will still be permissible.

Costs of Ownership

As well as the fees of purchase it is also necessary to think about the ongoing costs of ownership inside assessing the affordability / profitability of a property.

Every property inside the U. K. is liable for Council Tax. Each property is allocated to a band (A-H) according to the value in 1991 (this is approximated for newer properties). The amount of council tax is set by each local authority for each band each year. Cutbacks are available for certain categories of people, for example a 25% discount for solitary householders, and benefits for those upon low incomes.

Flat owners normally have to pay some kind of maintenance / managing / service costs. These protect shared expenses eg buildings insurance, communal lighting, gardening etc. These types of should be identified before agreeing to buy.

Although freehold properties do not catch the attention of maintenance changes, the prudent owner will put a sum besides weekly or monthly to cover vehicle repairs and maintenance as necessary.

A mortgage lender should generally insist the building is completely insured to protect their security. Depending on the loan and lender they may also insist upon life insurance, payment protection insurance policy etc. It is usually advisable to take out elements insurance alongside buildings insurance.