aclear,impartialguideto… buyingahome · 2018-06-18 · rics.org/usefulguides viewingaproperty...

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Process | Contract | Moving in

Buying a home

Contents

03 Buying a home

04 The process

05 Choosing your property

10 Agreeing the sale

11 Financing your property

12 Arranging a survey

13 Instructing your solicitor/conveyancer

13 Exchange of contracts

13 Completion

14 Moving costs checklist

17 Useful links

18 Free RICS guides

19 Further information

19 Find an RICS member


“Buying, selling or extending a home isone of the most exciting things you’llever do – its also one of the biggestfinancial commitments you’ll make.

More than ever before, property meansbig money – YOUR money. It will payfor you to seek the best advice possiblefrom professional experts who reallyknow what they are talking about.

It’s my opinion that you can do no betterthan accept ‘a helping hand’ from RICS.”

Phil Spencer


Buying a home

03

When you buy a home, take advantage ofprofessional expertise and independent adviceby using estate agents and surveyors who areRICS members.

When you buy your home, you cantake advantage of expertise fromthe outset by using an RICS estateagent who follows the standardslaid out in the Blue Book:Residential Property Standards.

The advantages of using an RICSestate agent are:

� They give you clear, impartial andexpert advice

� They act in your interest

� They are tightly regulated and haveto follow strict rules of conduct –including having in place insuranceto protect you

� RICS members have a specific setof rules and best practice guidance,the Blue Book: Residential PropertyStandards designed to help ensureRICS estate agents provideexceptional service

� RICS members have to updatetheir skills and knowledge throughouttheir careers, so you can rely ontheir expertise

� You are protected by acomplaints procedure.

Look out for firms that are ‘Regulatedby RICS’ and follow the standards laidout in the Blue Book. Estate agents andsurveying firms that are regulated by RICSwill be easier to spot as they will be using‘Regulated by RICS’ on their stationeryand advertising material.


The process

1. Choosing your property

Decide on the kind of property andlocation you want. You should researchonline, visit the local agents and lookaround several properties, to get a feelfor the market before you buy.

2. Agreeing the sale

Before you agree a price or sign anything,make sure you know what’s included inthe asking price.

� Check you’re keeping all thefixtures and fittings as listed in theproperty details

� If you like the carpets, see if they’reincluded too

� You’ll find furniture isn’t usuallyincluded, unless it’s specifically listed.

Your accepted offer is still ‘subjectto contract’ – which means the sale isagreed but isn’t binding until you exchangecontracts. Up to that point either sidecan back out without penalty.

3. Financing your property

If you haven’t already got a mortgagein place, your next step is to find one –or make sure you have the money ready.

4. Arranging a survey

Ask an RICS member to conduct a surveyof the property – for more information, seethe section on surveys in this guide, ortake a look at the separate guide in thisseries ‘RICS Property Surveys’.

5. Instructing yoursolicitor/conveyancer

You will need a solicitor or conveyancerand costs vary considerably so it paysto get estimates. Once they’re happywith the legal aspects of the property,and you have the finance in place, youcan exchange contracts.

6. Exchange of contracts

When you exchange, you will normallyagreed sale price. At this point instructyour removal firm.

7. Completion

You complete on the date agreed in thecontract, when the rest of the money istransferred to the seller. This is usually twoto four weeks from exchange of contracts.Collect keys from the seller’s estate agentand then you can move in.

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1. Choosing your property

Decide on the kind of propertyand location you want, such assemi-detached, terraced, or flat –then ask yourself a few questionseach time you view somewhere:� Can you really afford it?

� Is it near the transport links, or schools,or facilities you need?

� Do you like the area?

� Is it big enough?

� How old is it?

� Does it have enough outdoor space,such as gardens and garages?

� Is it freehold or leasehold?

To find suitable properties, we canprovide a list of local RICS estate agentswho can help with your search. You canalso search the internet or look throughthe local papers. It’s a good idea to lookaround several properties and get a feelfor the market before you buy.

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Viewing a property

First impressions count for a lot –but you should view a property at leasttwice, preferably at different times of theday, to give you a better idea of what’son offer. Location is an importantconsideration, so check the surroundingarea and local amenities. Here are a fewthings to think about to make sure itmeets your requirements:� Nearby main roads, pubs, clubsor restaurants – they can be handy,but noisy

� Nearby railway lines – or overheadflight paths

� The feel of the community – does itseem friendly?

� The aspect of the house – does it getenough light?

� Is the property well maintained?� The age of the property� Garden size� The condition of nearby properties.� Ask about the neighbours.

On the inside, check to see whether:� The property needs updating –and if so, how much?

� Everything works, like the lights,taps, plugs and windows

� The rooms are big enough� The fixtures and fittings are goingto be included in the sale

� You like the views� It feels like home.

New properties –things to keep in mind

New properties are very popular and oftensell at a premium to reflect the includedextras. After a few years, the price of newproperty moves into line with the localproperty market.

Before you buy a new property, makesure you have a solicitor on board tocheck the property:

� Has proper planning permission and iscorrectly built on its allocated plot

� Hasn’t been built on contaminated orfilled land – or if it has, you have validcertificates ensuring the land has beenproperly treated first. This is crucial forbuilding insurance.

You should also get the builder to give you:

� Proper guarantees, such as an NHBCBuildmark or similar certificates

� Test certificates and user guides forany electrical, gas or built-in appliances

� The final certificate from the localauthority building inspector

� Confirmation the property’s energyefficiency matches the SAP (StandardAssessment Procedure) rating providedto the local authority.

If you’d like to know more about what tolook for when buying a new home visit theNational House Building Council websiteat www.nhbc.co.uk

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Older propertiesand those needing work

If you want to buy an older property, we’dstrongly advise having a Building Surveyfirst. A cost effective alternative, whereappropriate, is an RICS HomeBuyersReport www.rics.org/hbr An RICSmember will find out if there are anyproblems, and could help you avoidspending a small fortune to fix thingsat a later date.

When you buy an older propertyfor renovation, you need to checkbuilding regulations carefully. Your RICSsurveyor can help ensure this is doneaccurately and professionally. Somemajor building repairs may also needpermission from your local authoritybuilding regulations department.

Before you buy a property to renovate,work out the total cost of repairs on top ofthe initial outlay – and decide whether theproperty is still worth renovating. Bear inmind the cost of repairs and improvementsare not always cost effective in terms ofincreasing the value of the property.

Listed buildings

If the property is a listed building, or ina conservation area, any work you do onit may be restricted, and you will have tofollow certain guidelines. The scope forany structural change could be extremelylimited and you’ll need to discuss anyproposals with your local planningauthority. You may also have to getconsent from English Heritage (or WelshHeritage/CADW) before work can begin.

Non-traditional housing

If you’re looking for something different,you could check out the possibilities ofpre-fabricated buildings, constructed in afactory to your specifications and deliveredon-site. Off-site construction can includeanything from simple extensions builtready to plug into mains services, rightthrough to entire pre-fabricated houses,though arranging mortgage finance maynot be as straightforward as forconventional buildings.

If you’d like to know more about non-traditional housing visit The HousingForum atwww.constructingexcellence.org.uk

“The housing market constantly fluctuates,so when you are buying you need to workat controlling the only variables you caninfluence: the property you choose andthe price you pay. Remember, everydesign has its good and bad points– an RICS surveyor willknow what to look outfor in propertiesof a specific era.”

“Phil Spencer

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Buying at auction

Most property is bought and sold throughestate agents, but you can also buyproperty at auction. If you buy at auctionyou must exchange contracts and agreethe sale straight away. Do note you’ll belegally bound to the sale and can’t backout. We advise you to employ an RICSmember to undertake a survey of theproperty prior to the auction.

For further information on buying atauction please see the RICS PropertyAuctions guide by visitingwww.rics.org/propertyauctions

Types of ownership

There are four main types of ownership,otherwise known as ‘tenure’, for property:

Freehold

If you buy a property freehold, itmeans you have full ownership of theproperty until you decide to sell it.Freehold properties are usually houseswith gardens.

Leasehold

If you buy a leasehold property, it meansyou have part ownership and the right tolive there for a fixed time only – usuallythe balance of either 99 or 125 years(999 years or longer in Northern Ireland).Leasehold properties are generally flatsand maisonettes. A landlord owns thefreehold of the building, but doesn’t haveaccess to your flat unless invited.

The value of a lease decreases with time,but you can usually extend your lease orbuy a new one. Many building societiesand banks may have restrictions ongranting mortgages where leases arebelow 70 years. An RICS member cangive you more information about this.

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You’ll also probably have to pay groundrent on leasehold property, and if it’s a flator maisonette, you may have to pay aservice charge to cover repairs andcleaning of shared areas.

Before you buy a leasehold property, getyour solicitor to check:

� How much these extra charges are

� Whether you have to pay themin advance

� If a management company isresponsible for collecting payment

� Whether building maintenance ismanaged by the freeholder

� Any future costs, such as re-roofing,exterior redecoration, replacement oflifts or communal heating boilers

� Who has responsibility for repairs and

owned collectively by the leaseholders,also known as share of freehold, or by aseparate person or company

An RICS member can advise youon buying leasehold property as theremay be more onerous repairing andmaintenance responsibilities than witha freehold property.

Further advice can be obtained fromthe Leasehold Advisory Service byvisiting www.lease-advice.org

Commonhold

Leaseholders have the right to convertfrom leasehold to commonhold if they buyout the landlord, in both new and existingbuildings. Commonhold provides adifferent management structure for blocksof flats and other interdependent buildingswith shared services and common areas.Please note that commonhold does notexist in Northern Ireland, but leaseholdershave a right to buy out their ground rent.

Intermediate forms of ownership

These include shared ownership andshared equity schemes. You pay a mixtureof mortgage and/or subsidised rent,making the homes affordable for those onor below average incomes. If you start toearn more, you can increase your share inyour home, and may have the option ofowning the property outright.


2. Agreeing the sale

Most property is bought and soldthrough estate agents. Once you havechosen your property, you may be ableto negotiate with the seller on the askingprice. Owners do not have to accept thefirst offer that is put to them and youcan make them an increased offer.

Negotiation on the price of the property isoften easier if there are repairs to be done,or if the seller is looking for a quick sale(refer to the section on arranging a surveyfor more information).

Before you sign anything, make sure thatyou know what is included within theasking price. Check whether you arekeeping all the fixtures and fittings aslisted in the property details. If you likethe carpets, see if they are included too.You will find furniture isn’t usually included,unless it is specifically listed but someitems may be negotiable.

Remember, always check what is includedin the price before agreeing the sale.Once you are happy, put this in writingto confirm but it will be subject to formalexchange of contracts drawn up by yoursolicitor (be aware the law is differentin Scotland).

All homes being sold require an EnergyPerformance Certificate (EPC) to recordthe energy efficiency of the building.The certificate provides a rating A to G,where A is very efficient and G veryinefficient. The EPC will also includerecommendations on how to improve theefficiency of the home.

Once you have chosen a propertyyou will have to consider:� How to finance your property purchase

� Arranging a survey

� Instructing your solicitor/conveyancer.

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3. Financing your property

11

Unless you’re a cash buyer,you’ll need to arrange a mortgageto buy a home. A mortgage is aloan against the property, andthere’s a huge range of differentones available from banks, buildingsocieties and other lenders.Mortgage rates vary too, so it’sworth shopping around to get thebest deal you can. Make sure youare aware of any additional costslike arrangement fees.

What can you afford?

Based on your income, your mortgagelender can help you work out how muchyou can afford to spend on a property andthe minimum deposit you will need.

Most lenders will give you what’s knownas an ‘offer in principle’, or the amountthey’d be prepared to lend. It’s useful toget this before you start looking for a home.

Also, bear in mind there are alwaysadditional expenses like legal fees andmoving costs. We’ve included a checklistof costs at the back of this booklet, buthere’s an idea of things you’ll need tobudget for:

Moving costs� Deposit – normally at least 10% ofthe property value. If you take out asubstantial mortgage, you may be askedto pay a mortgage guarantee premium

� Mortgage repayments andlender charges

� Building survey or HomeBuyer Report

� Solicitor’s fees, including searches,Land Registry (registry of deedssometimes in Northern Ireland) andstamp duty

� Removal costs

� Possible reconnection costs for phone,gas, electricity and water

� Re-directing post.

Monthly costs� Mortgage

� Buildings and contents insurance

� Council tax

� Water rates

� Electricity and gas

� Phone and internet

� Ongoing repairs and decoration.



4. Arranging a survey

Your home is likely to be thebiggest purchase you’ll ever make,so having a survey is worth it. Asurvey could potentially save youthousands of pounds in costlyrepair bills in the future..

Which?, the Council of Mortgage Lendersand any solicitor will advise you to geta survey before you buy a property, andnot just to rely on a mortgage valuation.Here’s why:

Mortgage valuation

A valuation is not a survey. Your mortgagelender may send a valuer or use acomputer programme to assess whetherthe property offers sufficient security forthe amount of the mortgage. The valueris only concerned with problems thatmight affect the security of the loan,not whether there are any structuralproblems that need fixing.

Surveys

An RICS member carries out a survey tosee if there are any problems and answerany concerns you may have. It’s like a‘health check’ for buildings, which couldsave you thousands in the future. Thereare two main types:

HomeBuyer Report (HBR)

This is most suitable for conventionalproperties which are in reasonablecondition. It provides a concise reportdetailing any significant problems thatcould make a difference to the valueof the property.

Building Survey

This is suitable for all residentialproperties, providing a detailed reporton their construction and condition.It’s particularly useful if the property isdilapidated, has been extensively alteredor you’re planning a major conversionor renovation.

If an HBR has been carried out andhighlighted significant issues, you maywant a surveyor to investigate further.

To understand more about the differenttypes of surveys available and whatthey offer, view the Property Surveysleaflet guide by visitingwww.rics.org/propertysurveys

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When buying your property youwill need to employ a solicitor orconveyancer to help you obtainthe documents required for thecompletion of your sale.

Once you have found someone toundertake the legal work ensure that youhave agreed the fee for your service. Thiscan either be fixed or dependent upon thework to be undertaken.

Your solicitor will get involved in thecontract negotiation, exchange contractsand ensure completion by transferringthe title deeds and funds.

After all the enquiry forms andcontracts have been signed andreturned, this is the point at whichit is time to exchange.

The buyer and the seller will agree a datefor completion, i.e. the date that the sellerwill need to move out of the property. Thisis the stage at which the sale becomeslegal and binding.

The date of moving will have beenagreed by both parties.

On completion day the funds will beexchanged between solicitors and thekeys should be left with the estate agentfor collection by the buyer.

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5. Instructing yoursolicitor/conveyancer

6. Exchangeof contracts

7. Completion


Legal fees

Solicitors/Conveyancers

These vary from place to place. It’s worthasking if your solicitor will offer a no buy,no charge deal and check the range ofservices they’ll provide for the fee. It’soften worth choosing a solicitor on therecommendation of a friend or colleagueor otherwise contact the Law Society.

Land Registry fee

This is a charge on the purchase of theproperty and is related to the buying price– your solicitor will have a list of charges.

Other searches

These are to check on things like mineralrights, flooding, subsidence, landfill sitesand pollution in the area. There will beadditional fees for these searches.

Mortgage lender charges

Valuation fee

This is usually included in the mortgagearrangement charges.

Mortgage arrangement fee

This varies from one lender to another andcan be a significant amount, especially ifyou are taking out a fixed rate mortgage.

Mortgage indemnity policy

This is a one-off charge lenders make incase they have to repossess your propertyand sell it at a loss. The cost of the policyvaries and will depend upon the percentageof the loan in relation to the value of theproperty. And you only pay it if your loanis for a high percentage of the purchasecost of the property.

Mortgage redemption charge

You only pay this if you change lendersand break the terms of the mortgage –and it usually only applies to fixedrate mortgages.

Moving costs checklist


Bridging loan

If you complete the sale on your newproperty before you sell the one youalready own, you may have to take outa bridging loan. There are two types –the closed loan and the open loan. Witha closed loan you know in advance whenyou can repay it. With an open loan,there’s no set repayment date and itcarries a higher risk – so, where available,it’s very expensive. An alternative may betaking out a flexible short-term loan fromyour bank.

Survey

Keep in mind when you buy a home,you want independent advice, giving youthe detail you need. A valuation from amortgage lender may be free, but it isnot a survey. It only really tells the lenderwhether the house offers security up tothe amount you are wishing to borrow.A survey from an RICS member will tellyou a great deal more, and could saveyou thousands in the long run – especiallyin older properties, or when you want tomake alterations. It may also enable youto negotiate the price.

Surveyors’ fees vary, so compare pricesbefore choosing, and negotiate the feeto match the size and type of property.Ask the surveyor exactly what’s coveredin the survey, so you know what you’repaying for and can ask them to look forextra things.

Stamp duty

This is a tax on buying property,based on the price you pay.

For more information visitwww.hmrc.gov.uk/sdlt/rates-thresholdsor call the Inland Revenue on+44 (0)845 603 0135


Buildings insurance

From the moment you exchangecontracts, you need building insurance onyour new property. Insurance rates varybetween companies, so it’s worth gettingquotes from several different insurers –and make sure you know exactly what’scovered in the policy.

Services

You don’t usually have to pay to have gas,electricity or water reconnected, but theremay be a charge to reconnect the phone.

Moving expenses

The cost of moving varies according tohow much stuff you have, how difficult itis to pack, how far you’re moving and thetime of year. Shop around for the bestdeal – and remember it’s worth checkingto see if the quote includes insurance.

Storage

If you’re not moving straight into a newhome, you may have to consider storage.The costs for this vary according to thequantity of stuff involved – as a roughguide, a two-bedroom house will probablyfill up to four containers, and a three-bedroom house can fill six.

Specialist advice fromRICS members

Any RICS member specialising inconstruction, restoration or conservationcan help you with:

� Property extensions – designingalterations and additions and applyingfor planning permission

� Re-planning property – advising youhow to demolish or erect structuralwalls and other building elements

� Any work affecting boundary or partywalls with your new neighbours. If youwant to know more about party walls,visit our websitewww.rics.org/partywalls

� Safety features, including meansof escape

� Energy Performance recommendationsand certificates. Repairing listedbuildings and buildings inconservation areas.


Useful links

17

Here are some useful website addresses for advicewhen you’re buying a home:

Royal Institutionof Chartered Surveyors

www.rics.org/buyingahome

Which?

www.which.net

Inland Revenue

www.hmrc.gov.uk

Land Registry

www.landreg.gov.uk

Land Registers of Northern Ireland

www.lrni.gov.uk

General Consumer CouncilNorthern Ireland

www.gccni.org.uk

The Leasehold Advisory Service

www.lease-advice.org

Council of Mortgage Lenders

www.cml.org.uk

Law Society

www.lawsociety.org.uk

Free RICS guides

RICS have a range of free guidesavailable for the property issueslisted below.� Buying a home� Selling your home� Property surveys� Extending your home� Subsidence� Boundary disputes� Party walls� Right to light� Compulsory purchase

� Letting a property� Renting a property� Flooding� Property auctions� Buying and selling artand antiques at auction

To order your free copies, visitwww.rics.org/usefulguidesalternatively [email protected] call the RICS Contact Centre

0870 333 1600



For more information

We hope this guide is useful toyou. If you’d like to know moreabout buying a home, or howRICS can help, please contact us.

Visit our websitewww.rics.org/buyingahomealternatively [email protected] call the RICS Contact Centre

0870 333 1600

Consumer helplines

RICS offers telephone helplinesgiving you 30 minutes freeadvice on:� Boundary disputes� Party walls� Compulsory purchase

Just call 0870 333 1600and you will be put in touch withan RICS member local to you,willing to provide a free 30 minuteinitial consultation. Lines are open0830 – 1730 (GMT), Monday to Friday.

If you want to find independent,impartial advice from a qualifiedprofessional with good localknowledge, contact us.

Look out for firms that are ‘Regulated byRICS’. Estate agents and surveying firmsthat are regulated by RICS will be easierto spot as they will be using ‘Regulatedby RICS’ on their stationery andadvertising material.

To find a chartered surveyorin your area visitwww.ricsfirms.comalternatively [email protected] call the RICS Contact Centre

0870 333 1600

Find an RICS member

Advancing standards in land, property and construction.

RICS is the world’s leading qualification when it comesto professional standards in land, property and construction.

In a world where more and more people, governments, banksand commercial organisations demand greater certainty ofprofessional standards and ethics, attaining RICS statusis the recognised mark of property professionalism.

Over 100 000 property professionals working in the majorestablished and emerging economies of the world havealready recognised the importance of securing RICS statusby becoming members.

RICS is an independent professional body originallyestablished in the UK by Royal Charter. Since 1868, RICShas been committed to setting and upholding the higheststandards of excellence and integrity – providing impartial,authoritative advice on key issues affecting businessesand society.

RICS is a regulator of both its individual members and firmsenabling it to maintain the highest standards and providingthe basis for unparalleled client confidence in the sector.

RICS has a worldwide network. For further informationsimply contact the relevant RICS office or our Contact Centre.

Europe(excludingUnited Kingdom)[email protected]

United [email protected]

[email protected]

[email protected]

[email protected]

Middle [email protected]

[email protected]

[email protected]


RICS HQ

Parliament SquareLondon SW1P 3ADUnited Kingdom

Worldwide mediaenquiries:e [email protected]

Contact Centre:

e [email protected] +44 (0)870 333 1600f +44 (0)20 7334 3811

Your local RICS member

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aclear,impartialguideto… buyingahome · 2018-06-18 · rics.org/usefulguides viewingaproperty...

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