Cost of selling and buying property
LEGAL COSTS IN CONVEYANCING TRANSACTIONS
The costs of buying and selling property in this country can quickly add up. Fees for the production of Home Information Packs, Estate Agents fees, Brokers fees, Surveyors fees and the like make moving an expensive process.
On the legal side, the Solicitors who are instructed by a party to deal with their sale or purchase will naturally make charges for the services that they provide and the level of such charges will vary from one transaction to the next, based not only on the complexity of the transaction but, in the majority of instances, on the values of the properties being dealt with. When intending to instruct Solicitors, a prospective Client should always obtain a quotation for the Solicitors estimated costs prior to proceeding but in addition they should clarify what “disbursements” will also have to be paid.
Disbursements are the payments to third parties that are made through the Solicitors dealing with the transaction.
DISBURSEMENTS PAYABLE ON A PURCHASE TRANSACTION
1. STAMP DUTY:
By far and away the largest disbursement usually payable on a purchase transaction is Stamp Duty. This is the tax paid to the Government on the transfer of the property and is payable as a percentage of purchase price as follows:-
(i) Purchase Price up to the sum of £175,000.00. – Stamp Duty NIL
(ii) Above £175,000.00. to £250,000.00. - Stamp Duty one per cent
(iii) Above £250,000.00. to £500,000.00. – Stamp Duty three per cent.
(iv) On transactions above £500,000.00. - Stamp Duty - four per cent.
2. LAND REGISTRY FEE:
It is now compulsory to register each transfer of land at H M Land Registry and a fee is paid based on purchase price. On the average transaction this will be a sum of around £220.00.
3. PRE CONTRACT SEARCHES:
There are in fact numerous searches against the property that can be undertaken prior to purchase and often the Buyers Solicitors will have to decide whether such searches are applicable, for example, a Coal Mining Search revealing coal mining history in the area would clearly be inapplicable in suburban London. Sometimes the Buyer may have particular concerns as regards the property or a local area, for example, in respect of flooding and hence may request that certain searches are undertaken. On all transactions a Buyer’s Solicitors will wish to have sight of a Local Authority Search result and a Residential Drainage Search result although these should form part of the Home Information Pack and hence, it is often the case, that a Buyer may not have to pay any Pre Contract Search fees whatsoever.
In any event prior to completion the Buyers Solicitors will submit a Land Registry Search, costing £6.00., which reveals any variations to the Sellers title as provided to them previously and indeed affords them a priority period in which they submit their Client’s application for registration of title. In addition if the purchase is being funded with mortgage finance the Buyers Solicitors will submit a Bankruptcy Search (costing £2.00. per person) against the name of each Borrower on the mortgage.
4. ADDITIONAL LEASEHOLD FEES:
In the case of a Leasehold property the terms of the registered lease usually provide for Notice to be given to the Freeholder of any change of ownership and indeed mortgaging of the property and fees are paid to the Freeholder in respect of each such Notice, the amount of such fee being governed by the terms of the lease itself. In addition the Buyer may be obliged to enter into direct Deeds of Covenant with the Freeholder and any Management Company, agreeing to abide by the terms of the lease, or indeed become a Member of a Management Company. In these cases again additional fees will be payable to a Freeholder or Management Company but will vary from transaction to transaction according to the requirements of the individual parties.
5 ADDITIONAL COSTS :
When obtaining quotations from Solicitors a Buyer should be aware that some additional items may be quoted which effectively form part of the Solicitors costs. For example there may be a charge (exclusive of vat) for general postage, photocopying and other incidentals or there may be an administration charge (exclusive of vat) for dealing with telegraphic transfer of purchase monies to the Sellers Solicitors.
DISBURSEMENTS ON A SALE TRANSACTION
On a sale transaction the disbursements payable are likely to be limited to fees paid to the Land Registry for the provision of up to date office copy entries of the Seller’s title and possibly documents referred to therein, for example, the registered lease. As a result such disbursements would not be expected to exceed £30.00.
It should however be added that in the case of Leasehold properties, up to date information in respect of service charge, insurance and future works etc. may have to be obtained from the Freeholder/Management Agents for which such party would raise charges which ultimately must be borne by the Seller.
The Reader should appreciate that the aforementioned is, by its very nature, only a general guide to sums payable and hence specific details should be requested on any particular transaction.
This article was produced and supplied by
Mr Matthew Conroy LLB,
If you have any questions regarding the above article please feel free to contact Mr Matthew Conroy. E-mail solicitor
Also see:
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