Buying a new home is an exciting time but can also be quite daunting as there is a lot of paperwork and legal fees associated with purchasing a property. This article by our panel solicitors Direction Law, aims to help you get a better understanding of what conveyancing fees are involved and what each of them means for you and your finances during the buying process.
When purchasing a shared ownership property (or any property for that matter), you will need to instruct a solicitor to act on your behalf. It's helpful to get a few quotations from different firms for a comparison of costs, but it is important to look beyond the “headline fee” to find out what each solicitor is actually charging for their services.
What fees should you expect in your quotation?
- Legal Fees – this is the fee the solicitor charges for their services. This can differ depending on the purchase price of the property and whether it is leasehold or freehold.
- Bank Transfer fees - this is a fee for organising the bank transfer of the purchase monies to the seller.
- Preparing Stamp Duty Land Tax (SDLT) form - HMRC must be notified about property transactions on a Stamp Duty Land Tax (SDLT) return. Your solicitor will do this on your behalf and charge a fee for doing so.
- Mortgage lender fee – This is the fee a solicitor charges for acting for the mortgage lender.
Most firms charge for the above items, but the amounts vary from firm to firm, resulting in very different final charges. Some firms will charge other fees which may be contained in their Terms of Service, so make sure that you get a copy of these before deciding who to instruct.
These are expenses payable to third parties as part of the conveyancing transaction. They are paid via your solicitor to the third party; however, they can still vary from firm to firm.
- Bankruptcy search fee – this costs £2 per name searched and should be the same irrespective of which firm you instruct.
- HM Land Registry Search fee – This is another low-cost search and irrespective of which firm you instruct, the fee payable to the Land Registry will be the same.
- Search fees – There are other searches that the solicitor needs to do as part of the conveyancing process. Depending on the provider used and which searches are completed, the amount quoted may vary from firm to firm.
- Land Registry registration fee – This is a fee for the registration of your title to the property. There is a prescribed fee scale, based on the purchase price of the share, plus rent. Irrespective of which firm you instruct, the fee payable to the Land Registry will be the same.
- Stamp Duty Land Tax – as this is a tax the rules are the same irrespective of which firm does the conveyancing. The amount is calculated based on factors such as the property price, the share being purchased, and whether you are a first-time buyer.
Finally, if you are a first time buyer purchasing a new build shared ownership property, there are a few other things you need to budget for:
- It is standard practice for the Housing Association solicitors to charge certain fees to the buyer. These vary and will not be known when you obtain an initial quotation.
- There may be further fees payable to a superior landlord or managing agent.
- Housing Association's generally ask buyers to pay on completion the rent and service charge up to the end of the month of completion and for the whole of the following month.
It is important to make sure you read the quotes you get carefully and don’t be afraid to seek clarification. Be careful of cheap headline fees because often they aren’t as economical as they seem.
Although this article focuses on fees, it is worth noting that price is only one factor. Buyers should also consider experience, expertise, recommendation and customer service when choosing their solicitor.
Every year Direction Law acts for thousands of conveyancing clients. As well as dealing with traditional conveyancing they have large specialist teams dealing with all aspects of affordable housing, shared ownership and new build properties. For further information visit www.directionlaw.co.uk.
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