Conveyancing solicitors, Bird & Co, put ChatGPT to the test to see if it can answer the most common first-time buyer queries accurately, in place of a conveyancing solicitor. Looks like the AI chatbot has far to go to rival property solicitors in the UK…
ChatGPT has had a huge amount of coverage over the past few months, receiving both rave reviews and equally poor ones from people across the web. With the advent of AI chatbots, many are worried that their jobs are at risk. The question is, can the same be said for conveyancing solicitors in the UK?
As a first-time home buyer, it can be incredibly tricky to navigate the various nuances of buying a home for the first time. Because of this, people may be relying on new chatbot search platforms to find the advice they need in place of an expensive solicitor, perhaps so they can do the job themselves.
We analysed responses by ChatGPT to a list of typical questions associated with first time buyers. The most commonly asked questions were found using the keyword research function on Ahrefs.
From this, we assessed various criteria, namely whether ChatGPT can give factually correct answers to typical legal questions a first-time buyer would ask. We also wanted to assess how the answers given by ChatGPT compare to advice given by a typical conveyancing lawyer.
Ultimately, we wanted to see whether ChatGPT, as it stands, has a chance at rivalling the legal industry in the property sector.
What is ChatGPT?
Cofounded by Elon Musk and backed by Microsoft, ChatGPT is an artificially intelligent chatbot built by OpenAI. Inputting almost any question or command into the platform will return a useful response that can be widely utilised in various industries, especially for automation or creative tasks.
The recent release has caused a stir among the media, receiving lots of attention worldwide. Concerns have been raised regarding the impact of AI systems such as ChatGPT to a vast array of industries and jobs, including the legal sector. Many people believe that such AI tools could cause upcoming disruption and decimation of jobs in knowledge industries, as it replicates what a knowledge worker does very quickly and cheaply.
Language models are based on an immense amount of data, being hundreds of billions of documents and information. This allows the chatbot to answer any question you ask it, virtually. However, many are erring caution, especially in professional service industries where disseminating factual information and emotional intelligence are intrinsic to the role.
ChatGPT Answers Most Common First Time Buyer Questions
Let’s dive right into the data. We analysed the most searched questions on Ahrefs for various first-time buyer questions and terms, involving terms such as:
- First time buyer
- Stamp duty
So, how did ChatGPT do in answering these queries, and what does experienced conveyancer, Daniel Chard, have to say about the answers?
First Time Buyer Questions
Q - What is a first-time buyer?
A - A first-time buyer is a person who is purchasing a home or property for the first time. This term is commonly used in the real estate industry to refer to individuals who have never before owned a property, or who have not owned a property in the recent past.
First time buyers are often eligible for special programs or incentives offered by governments, lenders, or real estate agents to assist them in purchasing their first home. These programs may include lower interest rates, down payment assistance, or tax credits.
We started with a simple question just to get a clear definition from ChatGPT. This was a great in-depth answer, which even mentions incentives usually associated with first time buyers.
Q - How to get a mortgage as a first-time buyer
A – Getting a mortgage as a first-time buyer can seem daunting, but the process can be broken down into several steps. Here's an overview of how to get a mortgage as a first-time buyer:
- Check your credit score: Your credit score will play a large role in determining whether or not you will be approved for a mortgage, and what interest rate you will receive. Check your credit score and take steps to improve it if necessary.
- Determine your budget: Before you start house hunting, determine how much you can afford to spend on a home. Use a mortgage affordability calculator to get an idea of what your monthly mortgage payments will be.
- Save for a down payment: Most lenders require a down payment of at least 5% to 20% of the purchase price of the home. Start saving for a down payment as early as possible.
- Shop around for a mortgage: Research mortgage lenders and compare rates and terms. You may want to consider working with a mortgage broker, who can help you find the best mortgage for your needs.
- Get pre-approved: Once you've found a lender and a mortgage that works for you, get pre-approved for a mortgage. This will give you an idea of how much you can borrow and will help you to make a stronger offer when you find a home you want to buy.
- Find a home: Work with a real estate agent to find a home that meets your needs and fits your budget.
- Apply for a mortgage: Once you've found a home, apply for a mortgage. Your lender will require documentation, such as proof of income and employment, to process your application.
- Close on the home: Once your mortgage has been approved, you will close on the home. This involves signing paperwork and paying closing costs, which can include fees for the lender, the title company, and other services.
- Move in: Congratulations, you're a homeowner! Move in and start enjoying your new home.
Remember, getting a mortgage as a first time buyer can take time and effort, but it's worth it to achieve the dream of homeownership.
We like that this answer mentions credit checks and getting pre-approved for a mortgage before putting in an offer on a home. This is a very important step, as offering on a home can be a competitive process and, if you do not have a mortgage offer in place, you may find that the seller opts for a different buyer.
Ultimately, though, the chatbot provides a very basic and simplified version of events when it comes to actually buying the home itself. Firstly, it makes no mention of putting in an offer and waiting for this to be accepted, if you even have it accepted.
It makes it seem as though the process is easy and smooth, but it is usually far from it. Getting an offer in itself can be a gruelling process for a buyer; you would be incredibly lucky if your offer was accepted outright, and you may also experience some negotiation in terms of pricing, which ChatGPT also makes no mention of.
What’s more, the chatbot does not mention the intricacies of the process once you’ve had your offer accepted. The harsh truth is, even once your offer is accepted, you may not end up closing for a number of reasons, for example:
- The buyer chain: if one buyer in the property chain backs out, you may end up having to go back to the drawing board.
- Searches and checks: it is advised that you have your potential new home searched and checked for any circumstances that could make it difficult to live there, like flood risks, damp and insulation problems. At this stage, you may also want to renegotiate the price of the house based on any unforeseen changes you might need to make to the property.
- Soliciting a conveyancing lawyer: unless you’re in-the-know about the law, you are unlikely to be able to proceed without a conveyancing solicitor. They will deal with and organise the points mentioned above, and will also deal with registering you as the owner of the property once the sale has gone through. They will also deal with any extra financial commitments, like mortgages, ISA grants, and stamp duty. ChatGPT makes no mention of hiring one.
Q - Are you guaranteed a mortgage as a first time buyer?
A – No, as a first-time buyer, you are not guaranteed to be approved for a mortgage. While there are programs and incentives available for first time buyers, such as lower down payments and interest rates, the final decision on whether or not to approve your mortgage application rests with the lender.
To be approved for a mortgage as a first-time buyer, you will need to meet certain eligibility requirements, such as having a good credit score, a steady income, and a down payment. The exact requirements will depend on the lender and the type of mortgage you are applying for.
It is important to note that lenders will carefully evaluate your financial situation and your ability to repay the loan before approving your mortgage application. They will also consider the value of the property you are purchasing and may require an appraisal to determine the property's value.
If you are a first time buyer, it is a good idea to work with a mortgage broker or financial advisor who can help you understand the mortgage process and find a mortgage that fits your needs and financial situation.
A great answer, which even goes into detail about how mortgages are approved. However, a solicitor may offer a more in-depth explanation surrounding available schemes and requirements for first time buyers, as well as offering ways a person could build on their credit score and give likelihoods of being approved.
They may also ask follow up questions which would help to determine any bespoke actions moving forward that would help this particular buyer.
First Time Buyer Schemes Questions
Q -What is a first-time buyer scheme UK?
A – In the UK, first time buyer schemes are initiatives that are designed to help individuals get on the property ladder. These schemes offer various benefits such as lower deposit requirements, shared ownership options, and government-backed loans.
The aim of these schemes is to help first time buyers overcome some of the financial barriers to homeownership. Here are some of the main first time buyer schemes in the UK:
- Help to Buy Equity Loan: This scheme allows first time buyers to purchase a new-build home with a deposit of just 5%. The government provides an equity loan of up to 20% of the purchase price (or up to 40% in London), which is interest-free for the first five years.
- Shared Ownership: This scheme allows first time buyers to purchase a share of a property (between 25% and 75%), and pay rent on the remaining share. Over time, you can purchase additional shares in the property until you own it outright.
- Lifetime ISA: This is a savings account designed for first time buyers aged 18 to 39. You can save up to £4,000 per year, and the government provides a 25% bonus on your savings (up to a maximum of £1,000 per year) which can be used towards a deposit on your first home.
- Right to Buy: This scheme allows council tenants and some housing association tenants to purchase their home at a discounted price.
- Stamp Duty relief: First time buyers are exempt from paying Stamp Duty on properties up to a certain value (currently £300,000 in England and Northern Ireland, and £250,000 in Scotland and Wales).
These schemes can help first time buyers overcome some of the financial barriers to homeownership, but it's important to carefully evaluate your options and understand the terms and conditions of each scheme before making a decision.
Although this appears to be a good answer, there are some limitations to it. For example, it does not specify different schemes available in England, Wales, Northern Ireland, and Scotland. This would require a more tailored response to the client depending on where they are living,
The answer has also not provided every single option, or exemptions that may apply, including disability and people over a certain age.
This may perhaps be in fault due to the fact that we have not specifically asked ChatGPT for every Help to Buy scheme available in England and Wales. We have also not specified a detailed location.
However, a first-time buyer may not necessarily know exactly the questions to ask to get the response they may need. This is where a conveyancing lawyer would come into play, as they would be specifically trained to ask follow up questions which would provide the buyer with everything they need to move forward with all the information.
Q - How to apply for first time buyer scheme in the UK
A – The application process for first time buyer schemes in the UK can vary depending on the specific scheme you are applying for. However, here are some general steps that you can take to apply for a first-time buyer scheme:
- Research the schemes: First, you'll need to research the different first time buyer schemes available in the UK to find one that suits your needs. You can do this online or by speaking with a financial advisor or mortgage broker.
- Check your eligibility: Once you've identified a scheme that you're interested in, you'll need to check your eligibility. Each scheme has different eligibility criteria, so it's important to review these carefully.
- Speak with a lender or mortgage broker: If you're applying for a scheme that requires a mortgage, you'll need to speak with a lender or mortgage broker to see if you can get approved for a mortgage.
- Apply for the scheme: Once you've identified a scheme that you're eligible for and have been approved for a mortgage (if required), you can apply for the scheme. The application process will vary depending on the specific scheme, but it will typically involve filling out an application form and providing supporting documents, such as proof of income and identity.
- Complete the purchase: If your application is approved, you can move forward with the purchase of your home. The process will involve exchanging contracts, paying a deposit, and completing the sale.
It's important to note that the application process for first time buyer schemes can be complex, so it's a good idea to seek advice from a financial advisor or mortgage broker to ensure that you understand the process and are making the best decision for your individual circumstances.
A great basic answer to the question asked. However, there is not a lot of explanation around the eligibility of a person. An experienced solicitor would gather far more data before advising on what schemes to concentrate on.
Q - What types of first time buyer schemes are there in the UK?
A – In the UK, there are several first time home buyer grants and schemes available to help individuals get on the property ladder. To qualify for these grants, you typically need to meet certain eligibility criteria, which can vary depending on the specific scheme.
Here are some general requirements that may be necessary to qualify for a first time home buyer grant in the UK:
- Income requirements: Some schemes may have income limits or requirements, such as a maximum annual income or a minimum income level.
- First time buyer status: Most schemes require that you have not previously owned a home or had an interest in a property.
- Property value limits: Some schemes may have limits on the value of the property you can purchase with the grant.
- Residency requirements: You may need to be a UK resident or have a right to live and work in the UK.
- Property use: Some schemes may have restrictions on the use of the property, such as requiring it to be your primary residence.
Some of the first time home buyer grants and schemes available in the UK include the Help to Buy Equity Loan scheme, Shared Ownership, and the Right to Buy scheme. Each scheme has its own specific eligibility requirements, so it's important to do your research and find the scheme that is right for you.
You can find more information about first time home buyer grants and schemes in the UK on the government's website or by speaking with a financial advisor or mortgage broker.
Interestingly, this one actually points to an expert for further information. Clearly, ChatGPT understand its limitations and is clear on the level of depth it is able to provide.
Stamp Duty Questions
Q - How much is stamp duty in the UK for a first time buyer?
A – First-time buyers in the UK are eligible for a stamp duty relief known as the "First-Time Buyer Relief", which reduces the amount of stamp duty they are required to pay on their property purchase.
As of September 2021, this relief applies to properties purchased for up to £300,000. If the property purchased is worth between £300,000 and £500,000, the relief is applied to the first £300,000, and the buyer will pay standard rates on the remaining amount. The current standard rates of stamp duty in the UK are:
- 0% on the first £125,000 of the property value
- 2% on the portion of the property value between £125,001 and £250,000
- 5% on the portion of the property value between £250,001 and £925,000
- 10% on the portion of the property value between £925,001 and £1.5 million
- 12% on the portion of the property value above £1.5 million
So, as a first-time buyer, you would not have to pay any stamp duty on properties valued up to £300,000, and for properties valued between £300,000 and £500,000, you would pay 5% on the amount above £300,000.
This answer is not completely correct, is out of date, and lacks in depth explanation on specifics, including locations and dates. Stamp Duty requirements have changed a lot in recent years, and ChatGPT’s response has provided information that is a couple of years old.
In reality, from September 2022, temporary measures were put in place which means first time home buyers are exempt from Stamp Duty on properties up to £425,000, and pay 5% on the portion between £425,001 and £625,000. For those who buy a property worth over £625,000, normal rates apply.
This is remaining in place until March 2025. From this date, the policy may change.
The chatbot also makes no mention of specifics based on different locations. In fact, Wales and Scotland have different rates to England and Northern Ireland.
Q - When does first time buyer stamp duty relief in the UK end?
A – The first-time buyer stamp duty relief in the UK, which was introduced in November 2017, is currently still in effect. There have been no official announcements from the UK government regarding an end date for the scheme.
However, it's worth noting that government policies can change over time, so it's important to keep up to date with any updates or changes that may be made to the first-time buyer stamp duty relief in the future.
This answer is technically correct, and it helpfully recommends that people stay aware of changes to government schemes. However, as mentioned previously, it does not specify temporary measures that are currently in place to maintain economic stability.
Q - What is a first time buyer ISA in the UK?
A – A First-Time Buyer ISA (Individual Savings Account) is a type of savings account available in the UK that is designed to help first-time buyers save up for a deposit on their first home. It was introduced in December 2015 as part of the UK government's efforts to help people get onto the property ladder.
First-Time Buyer ISAs work by allowing savers to deposit up to £200 per month into the account. The government then adds a 25% bonus on top of the savings, up to a maximum bonus of £3,000. The bonus is paid directly to the mortgage lender when the buyer is ready to purchase their first home, and can be used towards the deposit.
To be eligible for a First-Time Buyer ISA, you must be a first-time buyer, meaning you have never owned a property before. The property you purchase must be in the UK and cost up to £250,000, or up to £450,000 if the property is in London.
It's worth noting that the First-Time Buyer ISA was replaced by the Lifetime ISA (LISA) in April 2017, which has similar features but with a higher annual savings limit of £4,000 and can be used for either buying a first home or saving for retirement. However, existing First-Time Buyer ISAs can still be used to receive the bonus.
This answer is somewhat reductive, as it does not note at the beginning of the answer that the ISA, which is more widely known as the “Help to Buy ISA”, is no longer available. What’s more, it was actually possible to create a new Help to Buy account up until 30th November 2019, not 2017, so this is incorrect.
The answer also does not make it clear that those who set up an account of this nature before 2019 are still able to add money to it, and use it to buy a house, up until 2029/30.
A conveyancing solicitor, who will remain up to date with all the financial and legal changes surrounding the property industry, would be able to provide all the information you’d need surrounding this topic.
Q - Can I use the help to buy ISA in the UK if I’m buying with someone else who is not a first time buyer?
A – Yes, you can still use a Help to Buy ISA in the UK when buying a property with someone who is not a first-time buyer, but your own eligibility for the scheme depends on whether you personally are a first-time buyer.
If you are a first-time buyer and are purchasing a property with someone who is not a first-time buyer, you can still open and contribute to a Help to Buy ISA, and receive the government bonus when you buy your first home. However, the bonus will only be paid on your share of the property price, up to a maximum property value of £250,000 outside of London or £450,000 in London.
If you are not a first-time buyer, you are not eligible to open a Help to Buy ISA, regardless of whether you are purchasing a property with someone who is a first-time buyer or not. However, there are other government schemes, such as the Lifetime ISA and shared ownership schemes, which may be available to you.
It's worth noting that the Help to Buy ISA scheme was closed to new applications in November 2019 and replaced by the Lifetime ISA, which has similar features but with a higher annual savings limit of £4,000 and can be used for either buying a first home or saving for retirement. Existing Help to Buy ISAs can still be used to receive the bonus, subject to the scheme's terms and conditions.
Generally, this answer is detailed and informative, however, it is somewhat contradictory. Firstly, it states that you can “still open and contribute to a Help to Buy ISA", but then goes on to say it “was closed to new applications in November 2019”. This contradicts its previous answer in terms of dates.
Similarly, it does not then clarify that you can still add to and cash in a Help to Buy ISA up until November 2029/30.
First Time Buyer Grants Questions
Q - How does a first time home buyer grant work in the UK?
A – There is no specific first-time home buyer grant in the UK, but there are several government schemes and incentives designed to help first-time buyers get onto the property ladder. Here are some examples:
- Help to Buy: This scheme provides a government loan of up to 20% of the purchase price (up to 40% in London) for new-build properties, which can be combined with a mortgage from a lender. The loan is interest-free for the first five years, and can help buyers who have a smaller deposit.
- Shared Ownership: This scheme allows you to buy a share (between 25% and 75%) of a property from a housing association, and pay rent on the remaining share. You can increase your share over time through a process called "staircasing."
- First-Time Buyer ISAs and Lifetime ISAs: These savings accounts offer a government bonus on top of your savings, which can be used towards a deposit on a property.
- Stamp Duty Relief: This provides first-time buyers with relief from paying Stamp Duty Land Tax (SDLT) on the first £300,000 of a property purchase, and a reduced rate on the portion between £300,000 and £500,000. This scheme has now ended in England and Northern Ireland but similar schemes may still be available in Scotland and Wales.
It's important to note that the eligibility criteria and terms and conditions for these schemes vary, so it's important to do your research and seek advice from a professional, such as a mortgage adviser or solicitor, to determine which scheme(s) are suitable for your circumstances.
This answer seems to confuse between a grant and a scheme. As we’ve explored, there were Help to Buy ISAs available to set up prior to November 2019, and it is still possible to use a Lifetime ISA for the same purpose.
Both of these options allow account owners to receive a grant from the government on purchase of a first home. ChatGPT does not seem to account for these complex situations in a way that a conveyancing expert could.
What do Our Findings Show?
ChatGPT provides what looks like detailed and intricate answers to a lot of the questions posed, on the surface. It brought in government information, which gave the appearance of factuality.
That said, in many cases, the details were not always accurate, and the information was often very reductive, without providing much substance. More specifically, we found that ChatGPT had the following faults in answering questions that first time buyers may have:
Lack of in-depth answers
Although the answers appeared lengthy and informative, the information given was no better than information you would find online from basic advice blogs or sites. Not only this, ChatGPT appeared to oversimplify the processes, which could raise the hopes of first-time buyers.
An experienced solicitor would be able to provide more in-depth tailored answers to the client’s circumstances.
Did not ask follow up questions
First timers are likely to be inexperienced, and therefore may need relatively simple definitions explained to them, including Stamp Duty and searches. Because of this, they are unlikely to ask detailed questions or follow up questions; they’ll take ChatGPT’s word for it.
As AI chatbots do not have this human capacity, it is unable to read between the lines to ask follow up questions to provide the most bespoke answer. It does not take into account specific situations and limitations in its advice, which sets it back in comparison to an experienced solicitor.
Some responses factually incorrect
Our investigation shows that, whilst ChatGPT normally gives factually correct information, it can and does provide responses that are confusing, incorrect, or even contradictory. This particularly applied to questions surrounding stamp duty for first time buyers. Timelines and intricate details were often mixed up, and it even contradicted at times, demonstrating its limitations.
Got dates and locations wrong
We found the most basic answers were given surrounding queries to do with schemes available for house purchasing. This meant that it was not clear on the legal changes that had occurred more recently, or any temporary legal measures. It also did not define between differences across the separate UK countries.
The lack of data gathering from ChatGPT (a limitation it acknowledges) means answers provided can only be very basic in comparison to what a legal expert would advise. We received no prompts or requests for further information from ChatGPT, which would help it to provide a more tailored useful response.
How Does ChatGPT Compare to Conveyancing Solicitors?
When we heard about ChatGPT, we had no choice but to jump on the band wagon and ask it questions to compare to how property professionals would respond. On the whole, we were impressed with elements of its capabilities in terms of answering first-time buyer queries. It is clear to see how ChatGPT could be disruptive for many sectors, including the legal sector as it improves.
However, the AI chat has many limitations in terms of giving accurate legal advice. These limitations include providing incorrect information on occasion, providing basic answers to complex queries, and failing to provide tailored responses. ChatGPT does accept there are limitations to the AI tool.
Following this research, we do not see how ChatGPT could currently replace the advice of a legal expert, especially in complex situations such as buying a house. This comes down to the nuances of the law, which changes frequently, as well as the human element of interactions with lawyers, which simply cannot be replaced by a chatbot.
What’s more, the huge quantity of information on the internet that chatbots must scour through to pinpoint current information is no doubt a challenge. It means we are unlikely to ever be able to trust ChatGPT to get their context correct.
It is clear AI tools like this could be useful in providing basic understanding to legal queries. It could even be useful as a starting point for many first-time buyers who are curious about the processes involved in buying a home, but responses should be taken as surface level knowledge.
The concern for solicitors and ChatGPT lies with the fact it is a completely free tool to use, which is 100% cheaper than going through a solicitor. It appears to provide answers that inexperienced people could believe to be factually correct.
As the AI tool is easy to access, it could be that many people look for short cut legal advice without taking its faults and limitations into consideration first. This could mean that, for first time buyers, the process of buying a house could take longer than necessary, or they may end up paying more than needs be.
A solicitor is able to provide completely tailored advice with the intention of saving clients time and money, so it is always going to be the better option over using AI.
To conclude, as AI technology becomes more sophisticated, we think solicitors would be better to embrace the benefits that ChatGPT provides and utilise it to reduce workload. With regular means testing from those with an experienced legal background, it could be that AI tools are used to answer very basic queries or could be used to draft skeleton documents such as for wills or contracts. This could be utilised by legal professionals to cut down time and workload where applicable.
However, when it comes to providing actionable legal property advice, nothing replaces a conveyancing solicitor, as of yet.
If you require conveyancing services as a first time buyer, be sure to head to our contact page for more information.