Buying Overseas Properties
England, Ireland, Scotland & Wales
After Your Offer Has Been Accepted
When your offer for the property has been accepted you will have to consider the following:-
Whether a holding deposit is payable
Arranging a mortgage - see below
Whether a survey is necessary - see below
Who will do the necessary legal work - see below
Whether you want to buy with someone else - see below.
Once the owners have accepted your offer the buyer may be asked to pay a small deposit to the estate agent. This is not usually more than £500. It is meant to show that you are serious about going ahead with the purchase. It is repayable if the sale does not go ahead.
Arranging a mortgage
If you have not already begun to arrange a mortgage, you should start to do this now. It should take about three weeks from the application for the mortgage to the formal offer being made by the lender. However, this time-scale may vary.
Whoever agrees to lend the money will want to have the property valued. This is to make sure that the lender could get the loan back if for any reason you stopped paying your mortgage and the house had to be sold again. The valuation will be done by a surveyor on behalf of the lender but you will have to pay for this valuation. The fee will be payable in advance, usually when the you send a completed mortgage application form to the lender.
If the amount of money to be borrowed is more than a certain percentage of the valuation of the property (usually 75-80%), your lender makes it a condition of the loan that you take out extra insurance to cover the extra amount. You pay a single premium to your lender which is usually added to the loan. This is known as a higher lending charge, or mortgage indemnity guarantee, (Private Mortgage Insurance in the U.S.)
For information on mortgage types and comparing mortgages within the UK, visit Mortgage Product Comparison.
Arranging a survey (Property Inspection)
The valuation, which is done for whoever
is lending the money, is not a survey. You should consider whether or not to have an independent survey carried out in addition to the valuation. The survey would not only consider the value of the property but would also examine the structure of the property and should identify any existing or potential problems.
There are two levels of survey that you can choose between:-
A full structural survey. This is suitable for a property which is large, more than 80/90 years old or in doubtful condition.
An intermediate or house/flat buyers report that gives a report on the condition of the parts of the house that are easy to see and to get at and may recommend further tests or investigations, for example, a specialist check for woodworm. This is particularly suitable for properties built this century which appear reasonably sound. It is much cheaper than a full structural survey.
It may possible for you to use the same surveyor who does the valuation to carry out the survey and this may be less expensive.
If the surveyor reports that there are some problems with the property, you will have to consider whether you still want to go ahead with the purchase or want to negotiate further with the seller about the price. The surveyor will usually advise you as to how any problems they have identified should be dealt with and the likely costs of this.
Choosing who is to do the legal work (conveyancing)
The legal process of transferring the ownership of the property from the present owner to the buyer is known as conveyancing. You should decide who you want to do the conveyancing work., normally:
A solicitor or
A licensed conveyancer.
Using a Solicitor
Most firms of solicitors offer a conveyancing service. Although all solicitors can legally do conveyancing, it is advisable to choose a solicitor who has experience in this work.
Using a Licensed Conveyancer (EW only)
You can use a licensed conveyancer to do your conveyancing.
Licensed conveyancers are not solicitors but are
licensed by the Council of Licensed
If you want to find out if a local conveyancer is licensed you can call:
The Council of Licensed Conveyancers
Tel: 01245 349599
Finding out how much it will cost
Before making a choice as to who will do the conveyancing, you should be advised to find out the probable costs of the conveyancing. It is important to contact more than one solicitor or licensed conveyancer as there is no set scale of fees for conveyancing. You should:
Check whether the figure quoted is a fixed fee or depends on how much work is involved.
Check that the figure includes stamp duty, search fees, land registration fees, expenses and VAT and get a breakdown of these costs.
Find out what charges, if any, will be made if the sale falls through before contracts are exchanged.
Enquiries made by the Solicitor or, in England and Wales, the Licensed Conveyancer
Once you have instructed the solicitor or, in England and Wales, a conveyancer, the sellers solicitor or the licensed conveyancer draws up a contract which will eventually be signed by you and the seller. However, before the contract can be signed, your solicitor or licensed conveyancer must make sure that there are no problems with the ownership of the property, rights of way, access, or future developments in the area that might affect the property. This is called making enquiries and searches. The solicitor or licensed conveyancer makes the enquiries and searches as follows:
These are enquiries made to the local authority about any matters which affect the property which involve the local authority, such as whether there is a compulsory purchase order on the property. Local searches also include questions about any proposed changes or development in the area that might affect the property such as roads, housing, shops. During the local search, the local Land Charges Register is also checked. This gives information about any matter which affects the property such as tree preservation orders, if it is a listed building or in a conservation area; and
Enquiries made to the seller by the solicitor or, in England and Wales, a licensed conveyancer.
These are a set of standard questions about the property, boundaries, neighbour disputes and fixtures and fittings that will remain in the property. There may also be additional questions that the solicitor or licensed conveyancer thinks are necessary, such as the transferability of guarantees for any work done on the house, for example, a damp proof course; and from the Land Registry.
Arranging to pay the 10% deposit
While the survery, etc., is being performed, you should decide how you will pay the deposit that has to be made when the contracts are exchanged. This deposit is usually 10% of the price of the home price. However, it is sometimes possible to come to an agreement to pay a smaller deposit.
Exchange of contracts
The final contract between you and the seller is prepared when:
The solicitor (or licensed conveyancer) and you are satisfied with the final outcome of all the enquiries,
Any surveyors report has been received and any necessary action taken,
The formal mortgage offer has been received,
Arrangements about the payment of the 10% deposit have been made,
The date of completion has been agreed.
You and the seller each have a copy of the
final contract which you must sign. These
signed contracts are then exchanged. At exchange of contracts both you and the seller are legally bound by the contract and the sale of the house has to go ahead. If you drop out, you will lose your deposit.
Completion of the purchase usually takes place about four weeks after exchange of contracts, although it can be earlier. On the day agreed for completion:
The mortgage lender releases the money.
The deeds to the property are handed over to your solicitor or licensed conveyancer.
The seller must hand over the keys and leave the property by an agreed time.