For those new to buying or selling a home, the whole process of Conveyancing can seem rather mysterious. At Bird & Co, we like to make things simple.
That’s why we’re compiling a series of blogs over the coming weeks to answer some common questions about Conveyancing. Not only that, but we’ve also compiled a handy jargon buster to bring some clarity to the legal terms that you might expect to hear during the course of your transaction.
Simply speaking, Conveyancing is the technical word for the legal process by which property is transferred from seller to purchaser.
Who can do it?
If you’re taking out a mortgage, lenders will insist that you use a conveyancer before they’ll deal with you. There are two types of professionals who are qualified to carry out Conveyancing work:
- Solicitors are fully trained in legal services including Conveyancing, and are regulated by the Solicitors Regulation Authority (SRA).
- Licensed Conveyancers are qualified in conveyancing law only. They are regulated by the Council of Licensed Conveyancers (CLC).
It’s essential that you choose carefully between a Conveyancing solicitor and a licensed conveyancer – we’ll be going in to more detail on the pros and cons of both in our next blog.
When do you need a conveyancer?
Whether it’s a multi-million pound mansion or a garden shed, if you want to buy or sell a property you will most likely need a conveyancer in order to be sure that all the legalities have been properly dealt with.
Big or small, a conveyancer plays a vital role in the transaction of any property. However, it’s not always about buying and selling – conveyancing solicitors are commonly needed for a variety of property-related affairs including the following:
- Remortgaging your property
- Transfer of equity
- Extending a lease
The jargon buster: Conveyancing terms explained
To help you get your head round the process, we’ve set out some of the terms you might hear from a conveyancer:
A freehold is the term used when the same person owns both the land and the buildings on that land outright, and it is theirs to possess, pass or sell. All properties will have a freehold, but the leasehold is only relevant for certain properties.
Although the land and buildings are still owned by the freeholder, the owner of a leasehold property is entitled to occupy the building - or part of it - for an agreed amount of time. This may involve paying rent to the freeholder (also known as the landlord). There will be a lease that sets out the terms under which the property is occupied.
In house sale and purchases we most commonly come across leasehold properties in relation to flats. A flat is sold by a long term lease (usually at least 99 years) and the Landlord retains the freehold for the whole building so that the structure of the building and any common areas can be managed and insured as a whole. The individual flat holders then pay a service charge, which is their share of the charges for maintaining the shared parts of the building.
Where it’s a Leasehold property, the freeholder might appoint a Managing Agent to govern the property in accordance with the terms of the lease.
In the context of the property, equity is the amount remaining when you take away the amount that is covered by a mortgage debt: it’s the portion of the property’s value that is yours.
This is the non-ministerial department that registers the ownership of a property in England and Wales. The Land Registry stores information on each property, which your solicitor will acquire and use to advise you. On completion of your purchase they will also register your ownership with the Land Registry. The fee payable for this varies dependent upon the value of the property and is one of the disbursements you will be asked to pay.
These are reports that detail any information about the property that may be relevant – finding out about the history of the property, the local authority’s plans in the area, and any other oddities you might need to know about. Property searches are crucial and are another disbursement you pay when buying a property. They can be sourced from the Local Authority and other bodies directly but in many circumstances private search companies are used in order to execute your purchase as efficiently as possible. Want some more advice on Searches? Get in touch!
Disbursements are third party expenses that your solicitor has to pay out during the Conveyancing process, such as Land Registry fees and property searches. Usually you will be asked to pay for these and your solicitor will pay the relevant parties when necessary. The cost of these vary by area and should be explained at the beginning of your transaction.
The contract is the document stating the conditions for the sale or purchase of a property.
This is the legal document containing the details of the property, and it is used to transfer the ownership from seller to buyer and register that ownership at the Land Registry.
Exchange of Contracts
Both Parties involved in a property transaction are required to sign identical contracts. Your solicitor will facilitate the “exchange”, as it is referred to. Once the contracts have been exchanged the agreement becomes legally binding on both parties, and a completion date is set.
This is the day your property transaction is completely finished, and ownership of the property has been successfully transferred from the seller to the buyer. The funds will be transferred on this day, and you’ll finally receive the keys to your new home - congratulations!
In many cases there will be a brief period between exchange and completion, typically a week. However this is not always necessarily the case and in some circumstances exchange and completion can even occur simultaneously.
Stamp Duty Land Tax
Also referred to as SDLT or Stamp Duty, this is the tax that you will have to pay when purchasing a property. If the property value is over £125,000, the amount you pay is a percentage of the price that rises in increments depending on how expensive the property is. You can check the amount of SDLT payable by using HMRC’s online calculator:
When the terms of your current mortgage are no longer suitable or you need to transfer equity, you may need to negotiate and agree the terms of a new mortgage with a new mortgage lender – this is referred to as remortgaging.
Transfer of Equity
This is the term used to refer to a transfer of a share in the equity in a property that is already owned by at least one of the parties to the transaction when there is not a sale of the property for full market value. Typically this is most often seen where there has been a relationship breakdown but it could be done for other reasons, such as a gift of a property from parents to a child.
The above is not an exhaustive list, and each transaction is different. Our specialist Conveyancing solicitors are here to help you every step of the way. If you have any questions or would just like some advice on what to do next, please contact us on 01636 600 656 or email firstname.lastname@example.org
Look out for our next blog for more Conveyancing tips and tricks.