The process of purchasing a property in the United Kingdom can be complicated and frustrating, as there are a number of requirements that need to be met for a completely lawful transaction.
However, it doesn’t have to be so with our expert Conveyancing Solicitors, who can guide you through the complexities of property transactions, ensuring a smooth and efficient experience.
Firstly, conveyancing is the legal process of transferring ownership of a property from one party to another. It is commonly referred to the whole body of legal-administrative work undertaken to enable a property sale or purchase to be legally valid, and which is usually undertaken by conveyancing solicitors or other licences conveyancers. Nevertheless, homeowners are legally able to undertake conveyancing themselves but the process can be complicated and time consuming.
Prior to beginning conveyancing work, it is a solicitor’s duty under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 to conduct necessary checks on their conveyancing client. Seeing as money laundering through property is recognised as a major issue, especially in London, solicitors are required to:
- Identify and verify the identity of their client;
- Identify and take reasonable steps to verify any beneficial owners of their client;
- Get information on the purpose of the client’s business relationship with them.
Solicitors are obligated to know their clients by verifying the authenticity of their evidence of identity, understand the purpose and risk of the transaction, and ensure that their client’s source of funds for the transaction is valid. Should solicitors feel that there are inconsistencies with the client’s statements and suspect that a money laundering offence is taking place, they are required to disclose it as a Suspicious Activity Report (SAR) to the National Crime Agency.
For more information regarding compliance requirements in the United Kingdom, please click the link.
Following a satisfactory completion of compliance, solicitors are able to proceed with conveyancing, including but not limited to property searches, report on title, completion and exchange and registration of the title.
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The average conveyancing process takes place between 8 and 12 weeks, with several stages from instruction to completion. Below is a simple guide to how a usual conveyancing matter takes place:
Stage 1: Beginning the Conveyancing Journey
The conveyancing process starts when a client’s offer on a property is accepted. Our role as the conveyancing provider involves contacting the seller’s solicitor to obtain the contract pack.
Stage 2: Document Preparation and Searches
At this juncture, our team conducts thorough local authority searches, such as Local Authority search, Water and Drainage Search, and Environmental search to name a few. It is a critical step in identifying potential issues that might affect the client’s property rights or responsibilities.
Stage 3: Review and Negotiation
Upon receiving the contract pack and search results, we meticulously analyse these documents and report all significant findings to the client. We then assist in discussing and setting a viable completion date, negotiating this with the seller’s conveyancing provider on the client’s behalf.
Stage 4: Moving Towards Contract Exchange
After the client reviews and is ready to proceed, we inform the seller’s solicitor of the client’s intention to proceed with the contract exchange. The client’s role here includes transferring the agreed-upon deposit to our firm.
Stage 5: Contract Exchange
This stage sees the exchange of signed contracts between the client’s and seller’s conveyancing providers and the handling of the deposit payment.
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From Exchange to Completion
Approaching completion, we prepare a completion statement and conduct priority searches, advising the client to arrange building insurance.
Stage 2: Finalizing the Property Transfer
We prepare the transfer deed for the property, which the client must then review, sign, and return.
Stage 3: Completion of Transfer Formalities
The signed transfer deed is sent to the seller’s conveyancing solicitor, marking a significant step towards finalizing the transfer.
Stage 4: Completion Day Activities
On completion day, we manage the final aspects, including the transfer of the remaining balance for the property to the seller’s conveyancer.
Stage 5: Post-Completion Procedures
Post-completion, our responsibilities include submitting the transfer deed and relevant documents to the Stamping Office and HM Land Registry for the registration of the client’s ownership.
Stage 6: Wrapping Up the Conveyancing Process
Once all registrations are complete, we secure and forward the title deeds to the client.
Addressing Potential Delays
Conveyancing can occasionally face delays due to planning permissions, search result issues or any other potential disputes. Our firm’s experienced conveyancers are adept at navigating these challenges, keeping the client’s transaction on course. We understand that each property transaction is unique, and this is particularly evident when comparing freehold and leasehold, residential and commercial conveyancing.
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Freehold vs. Leasehold
Properties will have to be sold either as a freehold or a leasehold.
A freehold is the most complete form of property ownership, as when purchasing a freehold property, it includes ownership over the building and the land on which it stands indefinitely. It usually involves fewer complications than leasehold transactions due to these key aspects:
- Simpler Process: with no lease terms to consider, the conveyancing process is more straightforward;
- No Ground Rent or Service Charges: unlike leasehold properties, freehold owners do not pay ground rent or service charges;
- Full Control: owners have greater freedom over their property, subject to legal and planning regulations.
A leasehold refers to owning a property for a fixed term but not the land on which it stands, and thus can be more complex due to additional lease-related considerations. This type of properties is common in apartment buildings and other shared buildings.
- Lease Terms: the lease agreement’s length, conditions, and restrictions have a significant role in the conveyancing process, usually lasting between 99 to 125 years but can extend up to 999 years;
- Ground Rent and Service Charges: leaseholder’s often pay these fees for maintenance and use of the building;
- Limited Control: leaseholders have limited control over their property as they must adhere to the terms and restrictions set out in the lease agreement, often needing the freeholder’s permission for significant alterations or changes.
While the basic conveyancing steps are similar for both freehold and leasehold properties, leasehold transactions often require additional checks. These include scrutinizing the lease terms, verifying service charge and ground rent payments, and understanding any restrictions or covenants in the lease.
In freehold conveyancing, the focus is more on the property’s title, boundary issues, and planning permissions. The absence of a lease simplifies the process, but due diligence is still necessary to ensure a clear title and to address any potential issues with the property itself.
The Difference Between Residential and Commercial Conveyancing
While residential and commercial conveyancing share some similarities, they have several distinct differences. Residential conveyancing, as it primarily deals with standard property types and follows a relatively predictable path, is often a more straightforward process involving the buying and selling of homes.
In contrast, commercial conveyancing often entails more complex legal work due to the specific nature of commercial properties and transactions. This includes considerations such as commercial leases, planning permissions for business use, and more extensive due diligence to assess the property’s suitability for specific business purposes. It is also in part due to the fact that commercial properties are often occupied by tenants, and the rights of these tenants must also be taken into account by both the seller and the buyer. Additionally, the financial aspects of commercial conveyancing can be more intricate, frequently involving larger sums and more complex financing arrangements.
Common instances of commercial conveyancing include but are not limited to:
- Retail units;
- Restaurants and bars;
- Offices and warehouses;
- Industrial sites;
- Land for development.
The cost of conveyancing varies case-by-case as it depends on the cost of the property in questions and how complex the transaction is. The biggest expense is usually the associated legal costs, which is generally between 0.5% to 1.25% of the value of the transaction.
In addition to the legal costs, there will also be attached disbursements, which include but are not limited to:
- Land registry fees;
- Property searches;
- Stamp Duty Land Tax.
The process of buying or selling a property can be complex and lengthy, and various issues may arise at any point during the transaction. There are also several legal documents that need to be handled, including various financial agreements. Due to the inherent risks and intricacies of these transactions, consulting with our skilled conveyancing professionals at Sterling Law, based in London, is a wise decision if you are interested in purchasing a property in the United Kingdom.