Good news for first time buyers looking to get on the property ladder
The Council of Mortgage Lenders (CML) has declared that the property market is "improving". This has been prompted by an increase in the number of 90% mortgage loans being offered by mortgage lenders which, in turn, has resulted in an increase in the number of first time buyers.
For first-time buyers, your first home represents the most important purchase you will have made in your life, and it often comes with a major change in lifestyle too. Property ownership versus rental means a greater responsibility on you, but also a sense of pride in being part of the UK property market.
But finding your first home is only part of the story. There are many other issues to consider. You and your surveyor are your eyes. What should you be looking for? What questions should you be asking the sellers?
It would be a grave mistake to automatically assume your own bank will offer you the best mortgage deal, or that the advert in a window offering a great mortgage rate is free of strings. If it sounds too good, it may well be too good. Always consider taking the advice of an Independent Financial Adviser (IFA) who specialises in mortgages. Independent from the Estate Agent selling the property to you. However, make sure that the mortgage adviser considers every single mortgage lender, including ones who only deal direct with the public as the IFA can still consider their rates and help you with the paperwork. An IFA can help you save thousands of pounds – paying for themselves many times over.
You will need a legal expert to help you handle the legal process in securing your legal ownership of the house. The process is called ‘conveyancing’, and your legal expert will be called a ‘conveyancer’. However, choosing the right conveyancer is a minefield. You would be forgiven for thinking ‘but I will get a solicitor?’ True, that is the best approach, but securing an actual Conveyancing Solicitor – and a decent one – is also a minefield.
Pre-2007, the property market was buoyant and highly profitable with the sheer volume of houses being bought and sold, and consequently the amount of overall legal fees being paid for the legal processes. As a result there developed, and still remains, a whole multitude of non-solicitor business who have set up to try and compete for a chunk of these legal fees where profit is the main goal. A worrying thought, as many businesses may recruit one solicitor to oversee the office, but then dozens of poorly trained individuals actually handle the legal side, making mistakes, causing delay, and often charging more than their counterpart solicitors. And these businesses can be fed legal work by Estate Agents who are paid by these businesses to refer your house move to them.
With the multitude of non-solicitor businesses, it is therefore difficult to weed through and secure the legally trained Conveyancing Solicitor. One only has to Google ‘conveyancing’ to now see such shockingly low legal fees being advertised – a major warning to be wary on ‘how can they do that?’ and ‘what corners are being cut to charge so little?’. With legal fees already being one of the cheapest parts of the home moving process (when compared to surveyors, mortgage brokers, estate agents, mortgage lender valuation/arrangement fees), the ever decreasing and cheaply advertised legal fees is not a good thing, but a cause for concern.
The Law Society places emphasis on Lexcel accredited legal firms, and now the new Conveyancing Quality Scheme (CQS). Both such schemes demonstrate that the legal firms prioritise quality – and therefore your welfare.
Always consult a Chartered Surveyor – independent from the Estate Agent selling the property – to establish whether the property should be surveyed. The starting point is that all properties should be surveyed, as the Seller has no legal duty to you as to the state and condition of the property. The warning ‘buyer beware’ applies. There is no obligation to make sure that the property is currently compliant with planning or building control – unlike in America where properties must be sold ‘up to Code’. Even on a new-build property, surveyors are employed to make sure the builder did a good job, rather than simply relying on the existence a new build guarantee that will invariably be on offer.
Once you employ your conveyancer, they will be looking to protect you from a multitude of potential legal defects with the property you are buying. Here are some examples – and depending on the quality of your conveyancer, they can and frequently do overlook (at your expense) once you have moved in and receive ‘a knock on the door’:
- The extent of your land
Is you conveyancer aware of the exact extent of the land you want to buy? Obtain a plan early on, so they do not labour under a mistake. Is there more than one parcel of land comprising the property address?
- Planning use of the Property
Has the property been bought over several parcels and land now used, for example, as a garden without a change of use Council planning consent – thwarting any plans you may have to extend the garden, or build a swimming pool or a tennis court.
- Previous alterations
It is important to make sure that any past alterations to the property received any required planning and building control consents as you will inherit any breaches. This could mean that you are required to spend thousands to make the offending matters comply with Council requirements, or even to remove them. A considerable knock-on impact on the value and enjoyment of your property.
Your property may have its access down a country lane. Do you have a legal right to use it? What contributions towards maintenance will you need to make?
- Private drainage
Instead of the property being connected to mains drainage via the water board, it may to a private system. A cesspool, cesspit or a more modern treatment system. But is it all on your land or do you need to cross a neighbour’s land – and do the property deeds allow you to?
- Water supply
Although rare, the water may be via a bore hole, or a supplied from an unknown source crossing many areas of land. Again, do the deeds give you to legal right to cross the neighbour’s land? If you are connected to the mains how far away is the main connection? The repair or renewal of your private pipe could be considerable. Is the water pressure sufficient, when was the quality of the water last tested? What is the cost of mains connection if the private supply is inferior?
Is the property supplied by gas, oil, LPG or electricity? Are the system working well, will the seller charge for left over fuel at the point you take over ownership? Was the system recently installed by an approved installer?
You and your conveyancer should always have the thought of re-sale in mind. Conveyancers are looking to protect you from defects in the legal papers, but are also thinking what will the buyer’s lawyer think when you re-sell.
Choosing an Estate Agent when you re-sell will also be difficult, but a good solution is to telephone the ‘conveyancing team’ of any local solicitor office to that Estate Agent and seek their recommendation, as they work with them all and know which ones are effective, and which ones should be avoided. They will be happy to take your call, and to offer this recommendation for free. They can usually recommend expert surveyors and IFA mortgage advisers too.