LEGAL
Buying a home is probably the single largest purchase anyone ever makes. It’s a big financial outlay in deposits, fees, moving costs and furnishings. In the current climate, with interest and mortgage rates still high, it makes sense to know exactly what you’re doing ahead of time so you can budget accordingly. Stephen Ward Director of Strategy and External Relations at the Council for Licensed Conveyancers explains what fees you will encounter when buying a home The lowdown on fees
One of the areas of homebuying that can seem mystifying to the unseasoned buyer is that of fees. In this article I outline what fees you can be expected to pay as part of buying your first property. WHAT ARE THE FEES? There are several different fees involved in the purchase of a property. These are broken down as: 9 The conveyancer’s fee – you are paying the conveyancer for the time it takes them to do the legal work. 9 Search fees – these include local authority searches to check there are no planning, pollution or conservation issues with the property you intend to purchase. There are also environmental searches which look at flooding risks, for example. Water and drainage searches make sure your home is connected to a public water supply and sewer. And finally, the Land Registry search ensures that the title register and title plan are all up to date and filed correctly. This ensures the seller actually owns the property they’re selling. 9 Disbursements – are costs payable to third parties that relate to your purchase, for example, Stamp Duty Land Tax (SDLT) when buying a house. Current standard bands for SDLT are: nothing to pay on the first £250,000 of your home’s value, 5% on the portion between £250,001 and £925,000, 10% on the portion from £925,001 to £1.5m and 15% on anything above £1.5m. 9 Completion fee – the cost of providing you with official copies of all the documents that are needed to prove you are now the legal owner of the property you have just bought. You should ask any conveyancer you are thinking of instructing for a quote before you engage their services. Any good-quality conveyancing practice will be happy to provide you with a breakdown of the fees, so you are clear on what monies will be due and when.You can see an example of the
costs template that practices regulated by the CLC should use on our website. You should also be wary of a “race to the bottom”. Cheapest doesn’t always mean best, and you should use websites such as Trustpilot to read reviews about the quality of the service other users have experienced before committing. Personal recommendations from friends, family and colleagues are also a great way to find a conveyancer and compare their service offering to others you may be considering. REFERRAL FEES You may have also heard of referral fees. Referral fees aren’t paid directly by you, the property purchaser, but are paid by some conveyancing firms to estate agents in exchange for being recommended to their clients.
Of course, the cost does fall to you, the client, in the end. While the practice of referral fees has attracted a lot of criticism in recent years, it’s still acceptable as long as the conveyancer makes it clear to their client that the practice is paying a referral fee. CLC-regulated firms are required to make clear to clients if they are paying a referral fee, but to make the system truly transparent, those making the referral and receiving the fee must also make the client aware of it. Don’t be afraid to ask! Estate agents and conveyancers alike should be happy to answer any questions you may have. If you are buying or selling a property, you can find more advice on the topic as well as a list of CLC-regulated conveyancers on our website.
For further information, please visit clc-uk.org
112 First Time Buyer August/September 2024
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