Episode 2: Moving home
Austin Lafferty guides us through the key stages of buying a property
Overview
Moving home, whether it’s taking your first step on the property ladder, or selling up and moving somewhere new, can be both exciting and daunting. There are many things to consider, and it can be difficult to navigate the various steps of the process from offer to completion.
In this episode of ‘It’s the Law’ Austin Lafferty guides us through the key stages of buying a property, and some of the issues that can arise in the conveyancing process.
First of all he talks about factors to think about when choosing a property from the location, to the type of property and then how it’s going to be funded. He discusses the issues to bear in mind if any gifts or loans from relatives are part of the funding.
We discuss the offer process, from how much to offer, notes of interest, closing dates and what it means if an offer is accepted.
The conveyancing process and legal terms are explained such as the missives, outlays, Land and Business Transaction Tax (LBTT) and Additional Dwelling Tax (second homes tax). Austin talks about why you should be your own detective on a property and how to resolve issues such as extensions which don’t have the correct planning permission.
Finally, he explains why the moving date can be so fraught and what to do if the property is not what it seems.
Meet the contributors
Austin Lafferty
Consultant Solicitor
Austin is married and has two adult children – one of whom is a solicitor in London. He has run many road races including several marathons, the most recent being London 2015, and has raised tens of thousands of pounds for various charities. His main sport is karate – he is now a fourth Dan black belt. Austin has also worked for many years as a professional artist, specialising in drawn and painted portraits – both human and animal!
Angela Roberts
Producer and Host
Before becoming a freelance producer, Angela has had a long and varied career at the BBC – first as a radio producer on live topical phone in shows on BBC Radio Scotland and Radio 5 Live where she met and worked with Austin, before producing radio features for BBC Radio Scotland and Radio 4. She then moved to Digital Learning at BBC Scotland working on a number of campaigns such as A History of the World in 100 Objects, Commonwealth Class and BBC News School Report. Latterly Angela led Authors Live, a partnership project with Scottish Book Trust, producing live TV events on iplayer featuring children’s authors.
Transcript
Angela: Hello and welcome to It's The Law. Today we're going to be looking at buying and selling a property. Moving home is often ranked as one of the most stressful life events in amongst death and divorce.
Austin: Sometimes causes it.
Angela: But why? Solicitor Austin Lafferty is here again to take us through the legal process and provide some tips hopefully on how to make it go smoothly.
Austin: Plus 45 years of doing this and that's that was my world weary comment a moment ago because you're quite right Angela it is a very stressful thing. The best laid plans and organisations for moving house whether it's a first house or selling and buying or downsizing or anything it just cannot be simple. It is never problem free. It's a question of minimising the problems and dealing as best you can with the problems and the trick is to get through it and then come out the other side and say in spite of all of the hassle and the worry, even the fear and the cost it was worth it.
Angela: Do you think we have unrealistic expectations of how it should work because it is such a big purchase it's unlike a car or any other: purchase that we're likely to make?
Austin: I think we are probably optimists and assume the best and assume that everybody will do their job and the market forces will work in our favour and that it's been done so often before by so many people over such a long time it will be okay if we just kind of keep ourselves focused and by and large that's the right philosophy to go in with. The devil is always in the detail and that can be from the very start when you go and see a property and you think it's lovely but you find out before you buy it when you look at the home report oh right it's got wet rot or it's got guarantees for you know roof repairs or whatever so you know already a bit of doubt comes into your mind or it can be further down the line when you're just about to complete and you find that the seller has maybe got a court order against them what we call an inhibition meaning they can't sell it legally without something else happening so I mean those are two small examples of things that can happen at either end of the process and there's plenty that can happen in between as well.
Angela: Okay we're starting to get into all the legal jargon there when you mentioned so many people do it and it must go okay - it sounds a bit like childbirth it reminded me of that analogy.
Austin: I’m sure that’s an accurate thing - there's probably less physical pain but there's everything else.
Angela: Okay let's look at how to go about buying a property let's say I've decided it's time to get on the property ladder or I'm fancying a change first of all where do I start looking?
Austin: In the old days I'm old enough to say you would have looked in estate agents windows and in the newspapers the weekly would have a property pages maybe on a Wednesday - now it's the internet. Every agent and every agency and every portal shows all the properties that may be available to sell and you can sift through those it can become very daunting very quickly so I think you've got to set yourself some rules and those rules are location - in and around whether it's Glasgow Edinburgh Dundee anywhere pick your area first. Second thing is pick your budget because actually your budget and the area will relate to each other because some areas are dearer than others. Work out what you can afford find out how much mortgage you can get now that doesn't mean you have to get the maximum mortgage that you're entitled to but it will let you know what the limits of your buying power are and as well as the general location think of what you need in a home. now. If you've got young children it may be primary schools it may be doctor surgery nearby it may be that you have to have certain kinds of shops or university or a college if you've got an older set of children that are maybe going to further education. Where do you or your partner work and indeed you might work in different places so do you have to find a house that's more or less equal between those two. So in summary work out where you want to and can live, how much you can afford also what kind of property After the pandemic I mean I thought gosh the property market's going to absolutely die because nobody can move house that was the case for about a week and a half then everybody decided they wanted to move house and that was because they wanted to work from home or have a house with an office in it or work nearer their relatives or their family or the children had come back to live at home so needed a bigger house a million reasons but work out the parameters before you do anything.
Angela: I think that's a big factor nowadays people are working from home so that's another issue looking at is there space for me to do that yes and also they they might think well a commute is not going to be every day anymore it might just be a couple of days so there's more scope for going further out. The big question I often think about is if you're already in a house do you have to sell that first and how do you start that negotiation?
05.23 Austin: Oh wow that that really is the source of huge amounts of stress and worry and the markets have changed over the years but in the last few years in places that I operate and that I'm aware of the market has got hotter and hotter and that means that people in under our Scottish system might make an offer for a property that's on the market but have competition of another three four five seven eight nine people all making offers and it's like a secret bid as it were so you don't know what other people are offering so you put in your offer and you don't get the property and informally you find out well you were seventh out of nine and the agents can't tell you what it went for over you know what you offered but eventually through registers of Scotland you could check and see what the property was bought for and people's jaws drop when they find it went for 40 grand more than I offered so in that kind of situation then I think you want to buy first because if you sell and sell to that pack of buyers that are at your estate agent's door then you might wait long enough to find something that you can beat the competition on. The safest way is to sell first because then you've got money sitting there you don't have two homes you don't have the extra stamp duty that I know we'll talk about in a moment or two you're not extended but you don't have any place to stay you've got to find temporary accommodation you might rent a property you might have family to go in with you might even live in your camper van - so the financially safe thing to do is sell first but in a busy market the best thing to do is buy
Angela: well, I had this many years ago when we were too worried about having two houses that we did sell first but we couldn't find anywhere so we had to move in with my in-laws which was fine but it's not really what we anticipated
Austin: yes that's not what your in-laws say but
Angela – no
Austin - no you're absolutely right and that's happened to me as well in fact what we did - this was before we had children - we bought a house in the south side of Glasgow and the house was fine, but the neighbours were terrible and it was in a main road and with a lot to do the house and we kind of realized we'd bitten off more than we could chew so we did the work we needed to do and almost almost immediately you know put the house back in the market and it sold pretty quickly we knew where we wanted to live and couldn't find a house so we bought a flat,a small flat and crammed everything into it until the house that we wanted came about we could just as easily have rented in that time but we also had t a period of time in our in-laws now our in-laws or my in-laws my wife's parents my father-in-law was my headmaster at school so it was it was even more cozy than than you might imagine, but you're right and that is part of the kind of strategy and planning do we buy first do we sell first are we prepared for a period of time when we don't have our own accommodation and can we work around that
Angela: Okay now you mentioned parents helping us out maybe with saying you can live with us meantime in terms of the funding what happens if my parents or a relative wants to give me some money towards a deposit for example if I'm a first-time buyer how does that complicate things?
Austin: Well we see almost every day certainly every week the bank of mum and dad coming in to help and partly that's because in in a hotter market you've got to add a bit on to the you know the home report value or the asking price through the estate agents in order to secure the property so even though you might be very diligent and frugal and save up your own money having that support from the the previous generation can be essential and can be a great thing and and there's absolutely nothing wrong with it but you're right in identifying the issue. On what basis is that money given is it a loan that will be repaid perhaps when you sell the property and and move into something bigger and the family grows and and you know your own property that you buy increases in value so there's money can be released - or is it a gift? if it's a gift then the parents or whoever gives it will never get it back and it's got to be documented as that and also if you're taking a mortgage to help you buy the property plus a gift from relatives that's got to be declared to the mortgage people. It doesn't have any tax implications it's a gift and it just goes into the property, but it is essential that everybody understands if it’s money going to come back sometime or if it’s a gift. Coa here’s oe wee thing – we’ll be doing a podcast on divorce in due course I’m sure and If that money was gifted then it is jointly owned by husband and wife – if it’s husband and wife that are buying the property and if they come to separate then the parents cannot come back and say oh, we gifted that money really to our son or daughter we want it back now or we want it on their side. That's not available if it is a true gift.
Angela: So we've seen a property we like and we want to offer. How does the offer process work?
Austin: Right. The first bit is the kind of legwork of going around seeing the properties and you may kiss a lot of frogs before you find a prince. But once you find the property that you're interested in, then that's really the time. If you've not already spoken to your solicitor, that's very much the time to have a solicitor know who you're dealing with and tell them that you're interested. What they will normally do is put in a formal note of interest. Now, this can just be a phone call or an email from the solicitor to the estate agents to say, my clients are interested in this property more than just they like the look of it. They are keen to consider an offer. This doesn't bind anybody to anything. It's not a legal thing, but it means that the estate agents will require to inform the solicitors, or they could speak directly to your clients to say, right, we now have five notes of interest. So we've got enough that we want to set a closing date. And that closing date is the date when these, in effect, sealed bids come in from all the interested parties. So all those who have given a formal note of interest are told, right, the closing date will be, you know, a week on Tuesday. So make sure your offers are in by then. So between now and, you know, week on Tuesday. You liaise with your solicitor and the solicitor will prepare a legal offer. And there's a format for these. Scottish solicitors have all agreed a sort of template for these offers to make them consistent and sort of harmonious with the process. And the solicitor will not sign and put that offer in until you as the client have said, right, here's what I want to offer. It's not up to the solicitor to decide that. It's up to you. You can take all sorts of advice. And if you can ask the solicitor, who may be doing deals all the time in this particular neighbourhood and give you some kind of steer, estate agents will also help you. You'll have a home report with the property that's being marketed. And that home report has a valuation and an actual survey and valuation in it. But you've got to take all those ingredients, plus your own gut instinct and your own need or desperation for the property and decide on a price. That price is fed into the legal offer and that is put in on the closing date.
Angela You mentioned a home report. I think in the old days, it was a survey that people that were buying, we all had to get our own surveys. But the home report has done away with that so
Austin: Yeah, it has. And at the time, everybody, I say everybody, solicitors and surveyors were very wary of the process thinking, oh dear, this is going to be a disaster and a nightmare and it's not going to solve the problem that it's meant to. And the problem was that if you had the nine notes of interest, that would be nine surveys that clients would have to pay for. It was right that that needed to be addressed. And the method of addressing it by having a single survey, which the seller gets and pays for, but the surveyor is responsible to the buyers as well, is at its heart a logical solution and actually has worked really well. Generally speaking, it's not perfect, but what it does is it gives the buyer an objective statement of the value. And also, if there, if there is dampness or other kind of obvious defects in the property, they will be listed in a very detailed survey. It's not, as I say, it's not perfect, but it works. And it's interesting, the valuation that is in the home report survey is more likely to be near the true value than the asking price, because the asking price could be deliberately deflated to encourage more people. I mean, for example, if a property, home report value is say 240,000, then the estate agent might say, well, make it offers over 210,000 and that'll get the feeding frenzy, that'll get the nine notes of interest. And the fact that I know there's nine notes of interest mean, I, oh gosh I'll need to offer more and more to beat the other eight. So it's all a bit of a dirty business the way I describe it. But the point is, there is an objective professional figure in there as one of the factors that you must take into account when offering.
Angela: If I had to offer a lot more than what the home report was, though, would my lender not be very happy with that?
Austin: Well, your lender would take a very clinical approach, and they would base their mortgage offer on the home report valuations. And you're absolutely right. It's not that they would, in any sense, disapprove of you offering more, but they would just say you're on your own. Anything you throw in beyond this is your responsibility. And that's fair enough. And if somebody is going to be in there, I mean, I've been in, for 32 years. So if you are prepared for the long haul and say to yourself, this house suits me uniquely because of where it is and how much there is in the way of accommodation and the rooms and everything about it, beautiful garden, I love gardening, then I'm going to be here for 10 years, 12 years, 15 years, 20 years. So I'll take a punt and I'll get my money back eventually. If you're going to turn it around in two years, don't do it.
Angela: Does something like gazumping still happen?
Austin: Not much. If somebody gets an offer for that 240,000 and tells the estate agent and their solicitor, you know, as a seller, I'm prepared to accept that. Let's go ahead. It's not binding at that point. It's not legally binding. There isn't a contract, but there is an understanding. And whilst the seller themselves can say, oh, I've just heard from Jimmy down the road, he's going to offer me 250,000. So I'll now change my mind. I'll refuse that first offer and take the second one. He's perfectly entitled to do that. Because he's not legally obliged to follow through. But the way the system works, solicitors, if they have been instructed to accept, you know, the first offer, they ethically are not allowed to act for that person to drop the first offer and go ahead with another one. It's not illegal. It's seen as being kind of dishonourable and unethical. And therefore the Law Society of Scotland rightly in my opinion has said, well, look, don't be part of that problem. Just back away. And your loyalty to the client is one thing, but your loyalty to fairness and decency, actually, and to the legal system of Scotland is something much bigger than that. And I don't know many lawyers who would argue with it. So worst case scenario is you lose a client out of it and everyone gets a bad taste in their mouth. But what is more likely to happen is you say to the client, look, you in good faith accepted the first offer. You could have said, no, you could have said, no, I'm going to hang out for another week. You didn't. So therefore, my advice is you should just stick with this. But if you don't want to stick with it, that's your option. But I'm out.
Angela: A bit like Dragon's Den (Yeah. Yes. )Okay. So if my offer is accepted, is that it? Have I bought the house?
Austin: No, you have done kind of 85% of the thing. But we move on to the conveyancing process. And the conveyancing process has, kind of, two aspects to it. One is the updating of title deeds. Now, we've all heard that phrase, title deeds. These days, in the Land Register of Scotland, it's all digital. But you get a title, which is in the name of the owner. And any mortgage lender is in that title as well, as a lender, not as owner, but as lender. And to get from offering for the property to the point of a title deed in your name has various technical legal steps, which the solicitors on sale and purchase side do and work towards the date of completion. The other aspect is that you haven't bought the property until missives are concluded. Now, in Scotland, missives are contractual letters. They're called missives because you send them, you know, one solicitor to another. The offer is sent, and that's the first missive. A qualified acceptance is sent back. That's the second missive. And then if everything is agreed, a final concluding missive is sent. And those are the missives. But, you know, the rest of the world will call it a contract. And once that contract has been concluded, it's binding. It's binding on seller and buyer. And after that point, neither can get out without penalty. So it's important that as you make progress from the point of making the offer and having it verbally accepted, that that's really when your solicitor takes over responsibility because they have to examine the title deed as it is. They've got to examine searches and reports and even a mining report. In huge bits of Scotland, there are mines underneath. So the seller through their solicitor has to get a mining report to say there's not going to be subsidence. And the historical record will bear that out. And the coal authority provides those through your searching company. So, I mean, that's just one huge number of things that they need to do. Now, by and large, solicitors will do that work without bothering you on every single thing. But they will be alert for saying to you if something, is relevant or important or wrong. For example, you buy a semi-detached house, which has got a lovely extension to the side. Part of the solicitor's job is to check the paperwork to make sure that extension has either planning permission or building control warrant and completion certificate, even electrical certificates. And if those are not produced to him or her, and he finds out that they are not current or available or have never been applied for, that's something that he, or she will tell the client, look, here's the thing. And even if missives are concluded, then a revelation like that, that there is something wrong means you can normally get out of the contract without having to follow through and pay. More likely what happens is it gets remedied because there's all sorts of minor things that can come up in the course of examination of title and documents, which the solicitors are kind of geared to look for. And there are solutions to about 95% of them.
Angela:I remember something like, a letter of comfort.
Austin: Yes!
Angela Is that still happening?
Austin: Well remembered. Well, the world has moved on a little bit, but it certainly is possible to overcome the lack of planning permission or building control documentation for, as I said, an extension or a conservatory or a dorm er window by a variety of means. Letter of comfort is the generic term. Normally these days, though, what would happen is that the seller would get an insurance policy. We call it a TIP, title indemnity policy. Which again, the specialist companies will provide these so that you have this with your title. And in the future, if somebody, for example, the local authority comes along and says, oh, we see that extension, we've got no record of this, then the insurers will pay out the costs of remedying it.
Angela: How many people tend to sell and buy and how do you coordinate that?
Austin: It's like a dance. I was going to say, and this is radio, so you can't see me, I'm, rubbing my tummy and patting my head at the same time. it is very much a coordinated activity and coming back to these missives what you don't want is that you start the ball rolling on sale and purchase with the idea of them meeting in the same date so that you use the money from the sale of your own old house to buy the new one and your mortgage your old mortgage gets paid off and your new mortgage drops in to pay for the new one and that's that's all fine but if on the way through there's a problem with your sale it's found out that there's something wrong in the title of your property or the the consents for extensions etc or just some one of a number of huge number of things that could happen so that your sale falls through that doesn't mean your purchase is going to fall through so you're stuck and the opposite is true you may be in good faith buying this property and the seller has a problem that no one knew about that doesn’t mean that your purchase can't go ahead but your sale must still there isn't a silver bullet answer to this but that's when the solicitors will really earn their money because it is complicated and can involve a bit of horse trading a bit of good faith a bit of persuasion and sometimes a lot of luck but if the plan is to buy and sell on the same day that's fine that's a perfectly mainstream thing to do but go into it with your eyes open that all sorts of things could go wrong and a word we've not used yet it's probably on your questions for me chain what about a chain because if you are what the English call a chain which is various people buying and selling various properties on the same day all kind of linking in with each other we have that in Scotland we don't we still don't call it that but that's what it is so that if there are you know maybe five parties you know three couples and two individuals all buying and selling properties kind of down a line on the same day and if one of them fails then that can have a knock-on effect all the way down
Angela: i mean i did have that situation where the people buying my house couldn't sell theirs
Austin: yeah
Angela: that leads me on to another question about second homes tax oh (yes yes) it's often in the news probably because people have bought another home but what if you haven't intentionally bought another home yes i take it that's when that comes in
Austin: that that's right it's called right i I used the phrase stamp duty earlier on but we don't call it that anymore in Scotland it's called land and buildings transaction tax and it's been in for quite a few years and there's a separate it's not HMRC it's a separate organisation revenue Scotland which deals with this and also landfill tax so if you are buying a property on which there is land and buildings transaction tax that's fine and it kind of broadly very broadly is similar to stamp duty as was and is still in in England but if you are buying a second home or if you are a limited company buying a home or if you are buying a home and haven't yet sold your own home then you will pay additional dwelling supplement ADS. if it's a dwelling house and you're buying it and it's additional to you know your own home then you will pay the tax on top of the land and buildings transaction tax. If you are buying and then sell you know three weeks later you will get that back you'll get that additional tax back there's all sorts of rules about you know second families second couples coming together that each own a property and are selling one and buying one together so we'll not go into the details of that but it can be a minefield but the main thing to remember is before you start the ball rolling formally to even make an offer you must ask your solicitor for a set of costings on the basis of either just the purchase or purchase and sale or purchase now and sale later or buying and telling your solicitor no I already own a property because one of the duties that solicitors have is that they must be transparent they must be detailed in the charges that they are going to impose now
Angela: is that outlays is that what outlays are called
Austin: exactly - and some people say oh that solicitor it was dear it cost me three and a half thousand pounds well of that three and a half thousand pounds all but 800 pounds might not be the solicitors but have to go through them because it goes to revenue scotland or it goes to registers of scotland when your title deed gets registered or it goes to the searching companies or it goes to surveyors and so forth so it's important before you start the process of buying a home or selling a home that you get even just a preliminary sense of of what it's going to cost and i know that in our office the number of times people contact us and say right I’m thinking of buying and i hear my colleagues saying right how much are you buying for because that doesn't affect the legal fee the legal fee tends to be a fixed fee based on on the property transaction but things like the registration of title things like the land of building transaction tax the additional dwelling supplement these are all graduated charges and therefore the more you're buying the property for the more you'll get charged not by us but through the solicitor and so on so that's through us as solicitors. So it's absolutely crucial that you understand what it's going to cost you, but specifically what tax you're likely to incur both now and kind of going forward.
Angela: So that's something to think about if you've got your mortgage in place, that's additional costs.
Austin: Yes. Oh yes. Buying any property, even buying a tiny flat will have costs that are unavoidable. Now, if you buy it for £80,000, that's well below the LBTT threshold, but there will always be registration dues for converting the seller's title to your title. There will always be a legal fee plus VAT, of course, on the legal fee. Solicitors have to charge VAT. They don't get any part of that. It goes straight on to the government.
Angela: I often see advertised when there's a new build or a new house, LBTT paid. (Yes.) Is that an incentive that they actually do pay that?
Austin: Absolutely. Yeah, absolutely. And again, that's probably before you get anywhere near a solicitor. You go to the sales office and reputable builders will have packages of all sorts. And it may be that you get to choose, well, do I get my LBTT paid or do you give me fitted wardrobes or carpeting throughout or you know whatever it is? It's a fundamental thing that we'll probably say in every single podcast in this series is don't agree anything until you know, until you've checked all of the financial details and all the contractual details, all the obligations on your side and the side of whoever you're dealing with. And builders are no different from that.
Angela: So there's a lot from the offer to actually getting the keys and having the missives concluded. How long roughly is that supposed to be?
Austin: Well, in the old days, I would have reckoned on six to eight weeks for a purchase. And that's not a bad thing, even though a lot of it is a digital now. I mean, payments are digital and the lenders, the mortgage lenders are all online and will download your stuff from them. It takes a period of weeks for everyone to kind of get in gear and get their heads around things. And also if you are, particularly if you're moving from how you're selling a house and buying another, there's a huge amount of stuff that's nothing to do with the law is thinning out the contents of your house, deciding what you're taking with you and what you're getting rid of. How are you getting rid of it? What are you going to put in your new house? So a period of weeks. And if it's a bit longer than that, for perfectly good reasons, that's absolutely fine. It can be three months because the person selling their house, perhaps it's somebody that's died and it's the executor selling the house and they've got to go through the court process, what we call confirmation, everyone else calls probate. So there's any number of reasons why. But again, prevention is better than cure. If the people marketing the property say, oh, the sellers can't give entry until X date. So when you're making your offer, have that in mind. So that might be an important thing. Or if the buyers are buying and saying, well, we offer such and such an amount of money, but our preferred date of entry is after Easter or whatever it happens to be, because we've got commitments or we've got a family wedding. It could be something as prosaic as just your own domestic needs. So the more information there is at the outset on all sides, the better. And the lawyers can kind of fall in behind that.
Angela: Okay. There's a lot to get through then, but the day has arrived. Why can it seem so fraught on the actual day of entry?
Austin: Well, the property you're buying, the people moving out of it may be buying the same day and their removal vans are timed to come in early morning and you're wanting in as soon as you can. But you can't get in until they're out. The money changing hands is a huge thing. People assume, some people assume that electronic monetary payments between banks are instantaneous. No, they're not. Here's the news to take from this podcast. It can be hours before the money actually appears at the other end. Now, by and large, it's reasonably quick, but let's not forget if you're in that chain that we don't call a chain and you're selling to buy, then you’re going to have to wait until the buyer's money has come into your solicitor's account before your solicitor can then send that money or part of it to the people you're buying from. And they can't get out until they've sent on their money to the people they're buying from and their furniture van has started to unload. It is even more than we talked about before, a dance. It's like angels dancing around on a pinhead. There is little room for manoeuvre. It's all going to happen, not just even within the day, in the business hours of the day, you know, nine till five.
Angela: It often seems to be a Friday, isn't it? Is that so that people can go at the weekend?
Austin: Yes, everybody moves on a Friday. And it is, it's because they then have the weekend off work to, you know, clean the place or tear stuff out, ter fireplaces out. It has become a sort of tradition that everybody moves house on a Friday, which has its own challenges because the banks are inundated with money. And when we talk about money, you know, if you're buying a house for 400,000 pounds, which is not a crazy amount, that's 400,000 individual pounds of money that somebody is responsible for from beginning to end. Also, if there are any hiccups along the way, we talked about the consents for alterations to the property or searches, something turns up in the search. There may be a search that's not updated until the date of entry itself. And you only find out then that there's an inhibition on the seller, which has to be sorted out. It's like one of these, you know, old films of, a newspaper office in the 1930s, people yelling down phones at each other and all the thing going mad. It can be a bit like that. But from a client's point of view, what I would ask any clients listening to this is be patient. Your solicitors are not ignoring you or avoiding you or sitting there drinking a delightful Americano coffee. They will have been hard at it in the days and weeks up to this. But on this day, everybody is battering themselves senseless to try and get solutions to all the problems. That's a very long answer to your question. Why does it always seem like a panic in the day? Because it is!
Angela: And solicitors always get the blame. They're in the middle, aren't they?
Austin: Solicitors always get the blame for everything. So don't worry about that. I'm well used to that.
Angela: : Okay. So when you finally got the keys and you arrive at the property, what happens if things are not what they seem? If the heating's not working or the people have taken something you expected still to be there? Yeah. You know, what sort of comeback do you have?
Austin: Well, you do have come back in law in that the missives, the Scottish standard missives, which is what most solicitors use, have a provision in them that, although it's the seller's survey and the buyer hasn't had a chance to check things like heating and plumbing and whatnot, once the buyer goes in, they retain contractual rights to certain protections. And broadly, it's this, that if any of the working systems in the house, by which I mean the heating and the plumbing, the electrics, the lights the garage doors, the power door on the garage, or those kinds of things, if they're not working, then the purchaser has a period of time, normally it's either five days or seven days, to report this to the sellers. Now they do it via emailing or phoning their own solicitor, who sends a notice, again, emailing it usually, to the seller solicitor saying the heating isn't working. And that puts the seller on notice that there's a problem. Now, it may just be that the buyer hasn't worked out the mechanism or someone has turned off a switch inadvertently and it's sorted. 90% of these things get sorted very easily and informally. But if the sellers either have been hiding something or they genuinely haven't known, but they haven't checked that a thing is working, then they're financially liable to either get it replaced, repaired, or to pay the money that the purchasers have to incur to get it fixed. So that's contractually and legally an obligation. The thing about taking stuff that's not that they shouldn't have... I got into terrible trouble when we moved into our current house 32 years ago, because the sellers were an older couple that brought up a family and were going to a kind of retirement situation. The lady said, could I take that light fitting from the front lounge? It's sentimental, value? And we were due to get it. And I said, yeah, on you go. My wife said, what happened to the fitting? I said, I let Mrs. Such and Such take it. She's never forgiven me for all these years. But the point is, if it's something that is part of the fixtures and fittings of the house and is covered by the missives, by your offer in effect, then the sellers cannot strip the place. They must leave it. And if they don't, you can insist on it coming back or you can sue them for the money that would require to replace it.
Angela: I'm actually just thinking about that case not too many months ago about the moths. Yes. The couple that found the moths infestation. Yes. And eventually returned the property. Yes.
Austin: Aha. Well...
Angela Has that happened up here? Have you ever heard anything like that?
Austin: I've never heard anything like that. But in the old days before Home Reports, if I were to buy a property and either I didn't get it surveyed properly or my surveyor missed something, then it would be that caveat emptor, let the buyer beware. It would be my problem and my responsibility. If the seller's surveyor, now that we have Home Reports and the seller's surveyor gets, you know, produces them, but is liable to us. If the seller's surveyor has missed something that they shouldn't have and that I lose out as a result of it, moths or dry rot, wet rot, then I can take action against the surveyor. Now, that said, I'm going to give one big caveat. Over the years since the Home Report system has started, I said earlier on it was a good system and worked pretty well, and that's true. But one of the loose ends of it is that the surveyors are very reluctant to accept, liability for anything that goes wrong. And it's been kind of established law that they don't have a high obligation when it comes to those kind of detailed things. So my advice to anybody buying a house is not only look at the Home Report and open all the drawers and try and look under the floorboards or up in the loft, make a nuisance of yourself, quiz the surveyor within an inch of their lives and say, oh, I noticed in the upstairs bedroom on the left, there was a damp patchAnd the thing, what's all that about? You're entitled to ask the surveyor directly. Try, try, try to do all the detective work at the outset rather than play catch up.
Angela Is it the same with a new build? What sort of come back do you have if you're buying a new house?
Austin: Most builders, and frankly wouldn't go ahead with a new build purchase unless this was the case, are registered with either the National House Builders Council or similar schemes which provide almost a kind of guarantee of workmanship so that if there is a snagging, then the builders themselves can be held to account for that. But if they are reluctant or refuse or go out of business, then the NHBC guarantee that you have, which your solicitor will have assisted in making sure is there, can be called in and almost as kind of independent remedial work can be done. Now, again, that system is not perfect, but it's better than nothing. And I've seen it work very well on everal rather difficult cases over the years. But as the property is being built and before you actually allow the money to be released, go back in and look and check everything and just be that nuisance, nebby and nosy and say, what about that? What about that? And make sure you're happy.
Angela: Okay. Let's just do a bit of a recap on top tips for buying a property, because I think we've covered just about everything now from offer to date of entry. So what are your top tips?
Austin: Top tips are, Yeah. Get ahead of everything. That is finding the property, knowing what kind of property and where you want. So do your research and homework first. Don't just kind of rock up at say an open night for a newly marketed property. Actually pick and choose the properties and the types of property and the places they're located in advance. When you go in to see a property, and this is the weird thing, people will spend more time on a suit of clothes for a couple of hundred pounds than they will, on looking around a house they're going to spend 400,000 pounds on. So in respect for the amount of money that you're going to be spending, check everything. Even the first time you go into look. Now, if you go in and see the property and just, you know, in 5 seconds, it's not gonna be for you. Don't bother doing that. But if you're interested, do your own detective work.
Angela: I think actually, you know, you can test drive a car. Yeah. But you can't go and have an overnight in a house that you're potentially going to live in forever.
Austin: That's right. And and how long are... people in viewing a house 20 minutes half an hour it's kind of bonkers in a way but you know go back for a second viewing and the second viewing can can be more exhaustive but just just be pushy within reason but even take a notebook with you of things that you want to check and and start that process when you come to the offer, offer as much as you are comfortable with so that if you get the property you think i'm glad i offered that much but if you don't get the property you say i'm glad i didn't offer any more that's that's my kind of watch word for it and don't assume your solicitor will know what to to offer they don't and particularly because it's a sealed bid situation. During the course of the transaction keep in touch with your solicitor don't phone them every day but expect that they will keep you posted and if you're wondering about something drop them a note either to the solicitor or the paralegal or the front office and they will keep you updated they should keep you updated proactively anyway. Make sure you've done all your figures properly so that you know what everything is going to cost including your mortgage your legal costs your tax your legal fee etc and when the day of entry comes about prepare to be patient but be available keep your mobile phone on don't go to the pictures or you know go out swimming just be available don't don't hang about your solicitor's office in person but be ready to answer questions or give instructions because you are the boss the solicitors is there as a kind of agent or servant of yours they have the expertise and and the experience but it is your decisions and they will always defer to you and once you're in the property check everything again so that if there is something wrong i mean for example if you go in in the middle of summer then you don't maybe normally put the heating on, put the heating on immediately aand check everything and listen out for noises and look for things and just just try and find fault and if there's not anything you have won a watch and one final thing to say for me it is the best physical and financial investment anybody could ever make so it's worth the pain
Angela: great thanks very much Austin
Austin: my pleasure.
Austin: Sometimes causes it.
Angela: But why? Solicitor Austin Lafferty is here again to take us through the legal process and provide some tips hopefully on how to make it go smoothly.
Austin: Plus 45 years of doing this and that's that was my world weary comment a moment ago because you're quite right Angela it is a very stressful thing. The best laid plans and organisations for moving house whether it's a first house or selling and buying or downsizing or anything it just cannot be simple. It is never problem free. It's a question of minimising the problems and dealing as best you can with the problems and the trick is to get through it and then come out the other side and say in spite of all of the hassle and the worry, even the fear and the cost it was worth it.
Angela: Do you think we have unrealistic expectations of how it should work because it is such a big purchase it's unlike a car or any other: purchase that we're likely to make?
Austin: I think we are probably optimists and assume the best and assume that everybody will do their job and the market forces will work in our favour and that it's been done so often before by so many people over such a long time it will be okay if we just kind of keep ourselves focused and by and large that's the right philosophy to go in with. The devil is always in the detail and that can be from the very start when you go and see a property and you think it's lovely but you find out before you buy it when you look at the home report oh right it's got wet rot or it's got guarantees for you know roof repairs or whatever so you know already a bit of doubt comes into your mind or it can be further down the line when you're just about to complete and you find that the seller has maybe got a court order against them what we call an inhibition meaning they can't sell it legally without something else happening so I mean those are two small examples of things that can happen at either end of the process and there's plenty that can happen in between as well.
Angela: Okay we're starting to get into all the legal jargon there when you mentioned so many people do it and it must go okay - it sounds a bit like childbirth it reminded me of that analogy.
Austin: I’m sure that’s an accurate thing - there's probably less physical pain but there's everything else.
Angela: Okay let's look at how to go about buying a property let's say I've decided it's time to get on the property ladder or I'm fancying a change first of all where do I start looking?
Austin: In the old days I'm old enough to say you would have looked in estate agents windows and in the newspapers the weekly would have a property pages maybe on a Wednesday - now it's the internet. Every agent and every agency and every portal shows all the properties that may be available to sell and you can sift through those it can become very daunting very quickly so I think you've got to set yourself some rules and those rules are location - in and around whether it's Glasgow Edinburgh Dundee anywhere pick your area first. Second thing is pick your budget because actually your budget and the area will relate to each other because some areas are dearer than others. Work out what you can afford find out how much mortgage you can get now that doesn't mean you have to get the maximum mortgage that you're entitled to but it will let you know what the limits of your buying power are and as well as the general location think of what you need in a home. now. If you've got young children it may be primary schools it may be doctor surgery nearby it may be that you have to have certain kinds of shops or university or a college if you've got an older set of children that are maybe going to further education. Where do you or your partner work and indeed you might work in different places so do you have to find a house that's more or less equal between those two. So in summary work out where you want to and can live, how much you can afford also what kind of property After the pandemic I mean I thought gosh the property market's going to absolutely die because nobody can move house that was the case for about a week and a half then everybody decided they wanted to move house and that was because they wanted to work from home or have a house with an office in it or work nearer their relatives or their family or the children had come back to live at home so needed a bigger house a million reasons but work out the parameters before you do anything.
Angela: I think that's a big factor nowadays people are working from home so that's another issue looking at is there space for me to do that yes and also they they might think well a commute is not going to be every day anymore it might just be a couple of days so there's more scope for going further out. The big question I often think about is if you're already in a house do you have to sell that first and how do you start that negotiation?
05.23 Austin: Oh wow that that really is the source of huge amounts of stress and worry and the markets have changed over the years but in the last few years in places that I operate and that I'm aware of the market has got hotter and hotter and that means that people in under our Scottish system might make an offer for a property that's on the market but have competition of another three four five seven eight nine people all making offers and it's like a secret bid as it were so you don't know what other people are offering so you put in your offer and you don't get the property and informally you find out well you were seventh out of nine and the agents can't tell you what it went for over you know what you offered but eventually through registers of Scotland you could check and see what the property was bought for and people's jaws drop when they find it went for 40 grand more than I offered so in that kind of situation then I think you want to buy first because if you sell and sell to that pack of buyers that are at your estate agent's door then you might wait long enough to find something that you can beat the competition on. The safest way is to sell first because then you've got money sitting there you don't have two homes you don't have the extra stamp duty that I know we'll talk about in a moment or two you're not extended but you don't have any place to stay you've got to find temporary accommodation you might rent a property you might have family to go in with you might even live in your camper van - so the financially safe thing to do is sell first but in a busy market the best thing to do is buy
Angela: well, I had this many years ago when we were too worried about having two houses that we did sell first but we couldn't find anywhere so we had to move in with my in-laws which was fine but it's not really what we anticipated
Austin: yes that's not what your in-laws say but
Angela – no
Austin - no you're absolutely right and that's happened to me as well in fact what we did - this was before we had children - we bought a house in the south side of Glasgow and the house was fine, but the neighbours were terrible and it was in a main road and with a lot to do the house and we kind of realized we'd bitten off more than we could chew so we did the work we needed to do and almost almost immediately you know put the house back in the market and it sold pretty quickly we knew where we wanted to live and couldn't find a house so we bought a flat,a small flat and crammed everything into it until the house that we wanted came about we could just as easily have rented in that time but we also had t a period of time in our in-laws now our in-laws or my in-laws my wife's parents my father-in-law was my headmaster at school so it was it was even more cozy than than you might imagine, but you're right and that is part of the kind of strategy and planning do we buy first do we sell first are we prepared for a period of time when we don't have our own accommodation and can we work around that
Angela: Okay now you mentioned parents helping us out maybe with saying you can live with us meantime in terms of the funding what happens if my parents or a relative wants to give me some money towards a deposit for example if I'm a first-time buyer how does that complicate things?
Austin: Well we see almost every day certainly every week the bank of mum and dad coming in to help and partly that's because in in a hotter market you've got to add a bit on to the you know the home report value or the asking price through the estate agents in order to secure the property so even though you might be very diligent and frugal and save up your own money having that support from the the previous generation can be essential and can be a great thing and and there's absolutely nothing wrong with it but you're right in identifying the issue. On what basis is that money given is it a loan that will be repaid perhaps when you sell the property and and move into something bigger and the family grows and and you know your own property that you buy increases in value so there's money can be released - or is it a gift? if it's a gift then the parents or whoever gives it will never get it back and it's got to be documented as that and also if you're taking a mortgage to help you buy the property plus a gift from relatives that's got to be declared to the mortgage people. It doesn't have any tax implications it's a gift and it just goes into the property, but it is essential that everybody understands if it’s money going to come back sometime or if it’s a gift. Coa here’s oe wee thing – we’ll be doing a podcast on divorce in due course I’m sure and If that money was gifted then it is jointly owned by husband and wife – if it’s husband and wife that are buying the property and if they come to separate then the parents cannot come back and say oh, we gifted that money really to our son or daughter we want it back now or we want it on their side. That's not available if it is a true gift.
Angela: So we've seen a property we like and we want to offer. How does the offer process work?
Austin: Right. The first bit is the kind of legwork of going around seeing the properties and you may kiss a lot of frogs before you find a prince. But once you find the property that you're interested in, then that's really the time. If you've not already spoken to your solicitor, that's very much the time to have a solicitor know who you're dealing with and tell them that you're interested. What they will normally do is put in a formal note of interest. Now, this can just be a phone call or an email from the solicitor to the estate agents to say, my clients are interested in this property more than just they like the look of it. They are keen to consider an offer. This doesn't bind anybody to anything. It's not a legal thing, but it means that the estate agents will require to inform the solicitors, or they could speak directly to your clients to say, right, we now have five notes of interest. So we've got enough that we want to set a closing date. And that closing date is the date when these, in effect, sealed bids come in from all the interested parties. So all those who have given a formal note of interest are told, right, the closing date will be, you know, a week on Tuesday. So make sure your offers are in by then. So between now and, you know, week on Tuesday. You liaise with your solicitor and the solicitor will prepare a legal offer. And there's a format for these. Scottish solicitors have all agreed a sort of template for these offers to make them consistent and sort of harmonious with the process. And the solicitor will not sign and put that offer in until you as the client have said, right, here's what I want to offer. It's not up to the solicitor to decide that. It's up to you. You can take all sorts of advice. And if you can ask the solicitor, who may be doing deals all the time in this particular neighbourhood and give you some kind of steer, estate agents will also help you. You'll have a home report with the property that's being marketed. And that home report has a valuation and an actual survey and valuation in it. But you've got to take all those ingredients, plus your own gut instinct and your own need or desperation for the property and decide on a price. That price is fed into the legal offer and that is put in on the closing date.
Angela You mentioned a home report. I think in the old days, it was a survey that people that were buying, we all had to get our own surveys. But the home report has done away with that so
Austin: Yeah, it has. And at the time, everybody, I say everybody, solicitors and surveyors were very wary of the process thinking, oh dear, this is going to be a disaster and a nightmare and it's not going to solve the problem that it's meant to. And the problem was that if you had the nine notes of interest, that would be nine surveys that clients would have to pay for. It was right that that needed to be addressed. And the method of addressing it by having a single survey, which the seller gets and pays for, but the surveyor is responsible to the buyers as well, is at its heart a logical solution and actually has worked really well. Generally speaking, it's not perfect, but what it does is it gives the buyer an objective statement of the value. And also, if there, if there is dampness or other kind of obvious defects in the property, they will be listed in a very detailed survey. It's not, as I say, it's not perfect, but it works. And it's interesting, the valuation that is in the home report survey is more likely to be near the true value than the asking price, because the asking price could be deliberately deflated to encourage more people. I mean, for example, if a property, home report value is say 240,000, then the estate agent might say, well, make it offers over 210,000 and that'll get the feeding frenzy, that'll get the nine notes of interest. And the fact that I know there's nine notes of interest mean, I, oh gosh I'll need to offer more and more to beat the other eight. So it's all a bit of a dirty business the way I describe it. But the point is, there is an objective professional figure in there as one of the factors that you must take into account when offering.
Angela: If I had to offer a lot more than what the home report was, though, would my lender not be very happy with that?
Austin: Well, your lender would take a very clinical approach, and they would base their mortgage offer on the home report valuations. And you're absolutely right. It's not that they would, in any sense, disapprove of you offering more, but they would just say you're on your own. Anything you throw in beyond this is your responsibility. And that's fair enough. And if somebody is going to be in there, I mean, I've been in, for 32 years. So if you are prepared for the long haul and say to yourself, this house suits me uniquely because of where it is and how much there is in the way of accommodation and the rooms and everything about it, beautiful garden, I love gardening, then I'm going to be here for 10 years, 12 years, 15 years, 20 years. So I'll take a punt and I'll get my money back eventually. If you're going to turn it around in two years, don't do it.
Angela: Does something like gazumping still happen?
Austin: Not much. If somebody gets an offer for that 240,000 and tells the estate agent and their solicitor, you know, as a seller, I'm prepared to accept that. Let's go ahead. It's not binding at that point. It's not legally binding. There isn't a contract, but there is an understanding. And whilst the seller themselves can say, oh, I've just heard from Jimmy down the road, he's going to offer me 250,000. So I'll now change my mind. I'll refuse that first offer and take the second one. He's perfectly entitled to do that. Because he's not legally obliged to follow through. But the way the system works, solicitors, if they have been instructed to accept, you know, the first offer, they ethically are not allowed to act for that person to drop the first offer and go ahead with another one. It's not illegal. It's seen as being kind of dishonourable and unethical. And therefore the Law Society of Scotland rightly in my opinion has said, well, look, don't be part of that problem. Just back away. And your loyalty to the client is one thing, but your loyalty to fairness and decency, actually, and to the legal system of Scotland is something much bigger than that. And I don't know many lawyers who would argue with it. So worst case scenario is you lose a client out of it and everyone gets a bad taste in their mouth. But what is more likely to happen is you say to the client, look, you in good faith accepted the first offer. You could have said, no, you could have said, no, I'm going to hang out for another week. You didn't. So therefore, my advice is you should just stick with this. But if you don't want to stick with it, that's your option. But I'm out.
Angela: A bit like Dragon's Den (Yeah. Yes. )Okay. So if my offer is accepted, is that it? Have I bought the house?
Austin: No, you have done kind of 85% of the thing. But we move on to the conveyancing process. And the conveyancing process has, kind of, two aspects to it. One is the updating of title deeds. Now, we've all heard that phrase, title deeds. These days, in the Land Register of Scotland, it's all digital. But you get a title, which is in the name of the owner. And any mortgage lender is in that title as well, as a lender, not as owner, but as lender. And to get from offering for the property to the point of a title deed in your name has various technical legal steps, which the solicitors on sale and purchase side do and work towards the date of completion. The other aspect is that you haven't bought the property until missives are concluded. Now, in Scotland, missives are contractual letters. They're called missives because you send them, you know, one solicitor to another. The offer is sent, and that's the first missive. A qualified acceptance is sent back. That's the second missive. And then if everything is agreed, a final concluding missive is sent. And those are the missives. But, you know, the rest of the world will call it a contract. And once that contract has been concluded, it's binding. It's binding on seller and buyer. And after that point, neither can get out without penalty. So it's important that as you make progress from the point of making the offer and having it verbally accepted, that that's really when your solicitor takes over responsibility because they have to examine the title deed as it is. They've got to examine searches and reports and even a mining report. In huge bits of Scotland, there are mines underneath. So the seller through their solicitor has to get a mining report to say there's not going to be subsidence. And the historical record will bear that out. And the coal authority provides those through your searching company. So, I mean, that's just one huge number of things that they need to do. Now, by and large, solicitors will do that work without bothering you on every single thing. But they will be alert for saying to you if something, is relevant or important or wrong. For example, you buy a semi-detached house, which has got a lovely extension to the side. Part of the solicitor's job is to check the paperwork to make sure that extension has either planning permission or building control warrant and completion certificate, even electrical certificates. And if those are not produced to him or her, and he finds out that they are not current or available or have never been applied for, that's something that he, or she will tell the client, look, here's the thing. And even if missives are concluded, then a revelation like that, that there is something wrong means you can normally get out of the contract without having to follow through and pay. More likely what happens is it gets remedied because there's all sorts of minor things that can come up in the course of examination of title and documents, which the solicitors are kind of geared to look for. And there are solutions to about 95% of them.
Angela:I remember something like, a letter of comfort.
Austin: Yes!
Angela Is that still happening?
Austin: Well remembered. Well, the world has moved on a little bit, but it certainly is possible to overcome the lack of planning permission or building control documentation for, as I said, an extension or a conservatory or a dorm er window by a variety of means. Letter of comfort is the generic term. Normally these days, though, what would happen is that the seller would get an insurance policy. We call it a TIP, title indemnity policy. Which again, the specialist companies will provide these so that you have this with your title. And in the future, if somebody, for example, the local authority comes along and says, oh, we see that extension, we've got no record of this, then the insurers will pay out the costs of remedying it.
Angela: How many people tend to sell and buy and how do you coordinate that?
Austin: It's like a dance. I was going to say, and this is radio, so you can't see me, I'm, rubbing my tummy and patting my head at the same time. it is very much a coordinated activity and coming back to these missives what you don't want is that you start the ball rolling on sale and purchase with the idea of them meeting in the same date so that you use the money from the sale of your own old house to buy the new one and your mortgage your old mortgage gets paid off and your new mortgage drops in to pay for the new one and that's that's all fine but if on the way through there's a problem with your sale it's found out that there's something wrong in the title of your property or the the consents for extensions etc or just some one of a number of huge number of things that could happen so that your sale falls through that doesn't mean your purchase is going to fall through so you're stuck and the opposite is true you may be in good faith buying this property and the seller has a problem that no one knew about that doesn’t mean that your purchase can't go ahead but your sale must still there isn't a silver bullet answer to this but that's when the solicitors will really earn their money because it is complicated and can involve a bit of horse trading a bit of good faith a bit of persuasion and sometimes a lot of luck but if the plan is to buy and sell on the same day that's fine that's a perfectly mainstream thing to do but go into it with your eyes open that all sorts of things could go wrong and a word we've not used yet it's probably on your questions for me chain what about a chain because if you are what the English call a chain which is various people buying and selling various properties on the same day all kind of linking in with each other we have that in Scotland we don't we still don't call it that but that's what it is so that if there are you know maybe five parties you know three couples and two individuals all buying and selling properties kind of down a line on the same day and if one of them fails then that can have a knock-on effect all the way down
Angela: i mean i did have that situation where the people buying my house couldn't sell theirs
Austin: yeah
Angela: that leads me on to another question about second homes tax oh (yes yes) it's often in the news probably because people have bought another home but what if you haven't intentionally bought another home yes i take it that's when that comes in
Austin: that that's right it's called right i I used the phrase stamp duty earlier on but we don't call it that anymore in Scotland it's called land and buildings transaction tax and it's been in for quite a few years and there's a separate it's not HMRC it's a separate organisation revenue Scotland which deals with this and also landfill tax so if you are buying a property on which there is land and buildings transaction tax that's fine and it kind of broadly very broadly is similar to stamp duty as was and is still in in England but if you are buying a second home or if you are a limited company buying a home or if you are buying a home and haven't yet sold your own home then you will pay additional dwelling supplement ADS. if it's a dwelling house and you're buying it and it's additional to you know your own home then you will pay the tax on top of the land and buildings transaction tax. If you are buying and then sell you know three weeks later you will get that back you'll get that additional tax back there's all sorts of rules about you know second families second couples coming together that each own a property and are selling one and buying one together so we'll not go into the details of that but it can be a minefield but the main thing to remember is before you start the ball rolling formally to even make an offer you must ask your solicitor for a set of costings on the basis of either just the purchase or purchase and sale or purchase now and sale later or buying and telling your solicitor no I already own a property because one of the duties that solicitors have is that they must be transparent they must be detailed in the charges that they are going to impose now
Angela: is that outlays is that what outlays are called
Austin: exactly - and some people say oh that solicitor it was dear it cost me three and a half thousand pounds well of that three and a half thousand pounds all but 800 pounds might not be the solicitors but have to go through them because it goes to revenue scotland or it goes to registers of scotland when your title deed gets registered or it goes to the searching companies or it goes to surveyors and so forth so it's important before you start the process of buying a home or selling a home that you get even just a preliminary sense of of what it's going to cost and i know that in our office the number of times people contact us and say right I’m thinking of buying and i hear my colleagues saying right how much are you buying for because that doesn't affect the legal fee the legal fee tends to be a fixed fee based on on the property transaction but things like the registration of title things like the land of building transaction tax the additional dwelling supplement these are all graduated charges and therefore the more you're buying the property for the more you'll get charged not by us but through the solicitor and so on so that's through us as solicitors. So it's absolutely crucial that you understand what it's going to cost you, but specifically what tax you're likely to incur both now and kind of going forward.
Angela: So that's something to think about if you've got your mortgage in place, that's additional costs.
Austin: Yes. Oh yes. Buying any property, even buying a tiny flat will have costs that are unavoidable. Now, if you buy it for £80,000, that's well below the LBTT threshold, but there will always be registration dues for converting the seller's title to your title. There will always be a legal fee plus VAT, of course, on the legal fee. Solicitors have to charge VAT. They don't get any part of that. It goes straight on to the government.
Angela: I often see advertised when there's a new build or a new house, LBTT paid. (Yes.) Is that an incentive that they actually do pay that?
Austin: Absolutely. Yeah, absolutely. And again, that's probably before you get anywhere near a solicitor. You go to the sales office and reputable builders will have packages of all sorts. And it may be that you get to choose, well, do I get my LBTT paid or do you give me fitted wardrobes or carpeting throughout or you know whatever it is? It's a fundamental thing that we'll probably say in every single podcast in this series is don't agree anything until you know, until you've checked all of the financial details and all the contractual details, all the obligations on your side and the side of whoever you're dealing with. And builders are no different from that.
Angela: So there's a lot from the offer to actually getting the keys and having the missives concluded. How long roughly is that supposed to be?
Austin: Well, in the old days, I would have reckoned on six to eight weeks for a purchase. And that's not a bad thing, even though a lot of it is a digital now. I mean, payments are digital and the lenders, the mortgage lenders are all online and will download your stuff from them. It takes a period of weeks for everyone to kind of get in gear and get their heads around things. And also if you are, particularly if you're moving from how you're selling a house and buying another, there's a huge amount of stuff that's nothing to do with the law is thinning out the contents of your house, deciding what you're taking with you and what you're getting rid of. How are you getting rid of it? What are you going to put in your new house? So a period of weeks. And if it's a bit longer than that, for perfectly good reasons, that's absolutely fine. It can be three months because the person selling their house, perhaps it's somebody that's died and it's the executor selling the house and they've got to go through the court process, what we call confirmation, everyone else calls probate. So there's any number of reasons why. But again, prevention is better than cure. If the people marketing the property say, oh, the sellers can't give entry until X date. So when you're making your offer, have that in mind. So that might be an important thing. Or if the buyers are buying and saying, well, we offer such and such an amount of money, but our preferred date of entry is after Easter or whatever it happens to be, because we've got commitments or we've got a family wedding. It could be something as prosaic as just your own domestic needs. So the more information there is at the outset on all sides, the better. And the lawyers can kind of fall in behind that.
Angela: Okay. There's a lot to get through then, but the day has arrived. Why can it seem so fraught on the actual day of entry?
Austin: Well, the property you're buying, the people moving out of it may be buying the same day and their removal vans are timed to come in early morning and you're wanting in as soon as you can. But you can't get in until they're out. The money changing hands is a huge thing. People assume, some people assume that electronic monetary payments between banks are instantaneous. No, they're not. Here's the news to take from this podcast. It can be hours before the money actually appears at the other end. Now, by and large, it's reasonably quick, but let's not forget if you're in that chain that we don't call a chain and you're selling to buy, then you’re going to have to wait until the buyer's money has come into your solicitor's account before your solicitor can then send that money or part of it to the people you're buying from. And they can't get out until they've sent on their money to the people they're buying from and their furniture van has started to unload. It is even more than we talked about before, a dance. It's like angels dancing around on a pinhead. There is little room for manoeuvre. It's all going to happen, not just even within the day, in the business hours of the day, you know, nine till five.
Angela: It often seems to be a Friday, isn't it? Is that so that people can go at the weekend?
Austin: Yes, everybody moves on a Friday. And it is, it's because they then have the weekend off work to, you know, clean the place or tear stuff out, ter fireplaces out. It has become a sort of tradition that everybody moves house on a Friday, which has its own challenges because the banks are inundated with money. And when we talk about money, you know, if you're buying a house for 400,000 pounds, which is not a crazy amount, that's 400,000 individual pounds of money that somebody is responsible for from beginning to end. Also, if there are any hiccups along the way, we talked about the consents for alterations to the property or searches, something turns up in the search. There may be a search that's not updated until the date of entry itself. And you only find out then that there's an inhibition on the seller, which has to be sorted out. It's like one of these, you know, old films of, a newspaper office in the 1930s, people yelling down phones at each other and all the thing going mad. It can be a bit like that. But from a client's point of view, what I would ask any clients listening to this is be patient. Your solicitors are not ignoring you or avoiding you or sitting there drinking a delightful Americano coffee. They will have been hard at it in the days and weeks up to this. But on this day, everybody is battering themselves senseless to try and get solutions to all the problems. That's a very long answer to your question. Why does it always seem like a panic in the day? Because it is!
Angela: And solicitors always get the blame. They're in the middle, aren't they?
Austin: Solicitors always get the blame for everything. So don't worry about that. I'm well used to that.
Angela: : Okay. So when you finally got the keys and you arrive at the property, what happens if things are not what they seem? If the heating's not working or the people have taken something you expected still to be there? Yeah. You know, what sort of comeback do you have?
Austin: Well, you do have come back in law in that the missives, the Scottish standard missives, which is what most solicitors use, have a provision in them that, although it's the seller's survey and the buyer hasn't had a chance to check things like heating and plumbing and whatnot, once the buyer goes in, they retain contractual rights to certain protections. And broadly, it's this, that if any of the working systems in the house, by which I mean the heating and the plumbing, the electrics, the lights the garage doors, the power door on the garage, or those kinds of things, if they're not working, then the purchaser has a period of time, normally it's either five days or seven days, to report this to the sellers. Now they do it via emailing or phoning their own solicitor, who sends a notice, again, emailing it usually, to the seller solicitor saying the heating isn't working. And that puts the seller on notice that there's a problem. Now, it may just be that the buyer hasn't worked out the mechanism or someone has turned off a switch inadvertently and it's sorted. 90% of these things get sorted very easily and informally. But if the sellers either have been hiding something or they genuinely haven't known, but they haven't checked that a thing is working, then they're financially liable to either get it replaced, repaired, or to pay the money that the purchasers have to incur to get it fixed. So that's contractually and legally an obligation. The thing about taking stuff that's not that they shouldn't have... I got into terrible trouble when we moved into our current house 32 years ago, because the sellers were an older couple that brought up a family and were going to a kind of retirement situation. The lady said, could I take that light fitting from the front lounge? It's sentimental, value? And we were due to get it. And I said, yeah, on you go. My wife said, what happened to the fitting? I said, I let Mrs. Such and Such take it. She's never forgiven me for all these years. But the point is, if it's something that is part of the fixtures and fittings of the house and is covered by the missives, by your offer in effect, then the sellers cannot strip the place. They must leave it. And if they don't, you can insist on it coming back or you can sue them for the money that would require to replace it.
Angela: I'm actually just thinking about that case not too many months ago about the moths. Yes. The couple that found the moths infestation. Yes. And eventually returned the property. Yes.
Austin: Aha. Well...
Angela Has that happened up here? Have you ever heard anything like that?
Austin: I've never heard anything like that. But in the old days before Home Reports, if I were to buy a property and either I didn't get it surveyed properly or my surveyor missed something, then it would be that caveat emptor, let the buyer beware. It would be my problem and my responsibility. If the seller's surveyor, now that we have Home Reports and the seller's surveyor gets, you know, produces them, but is liable to us. If the seller's surveyor has missed something that they shouldn't have and that I lose out as a result of it, moths or dry rot, wet rot, then I can take action against the surveyor. Now, that said, I'm going to give one big caveat. Over the years since the Home Report system has started, I said earlier on it was a good system and worked pretty well, and that's true. But one of the loose ends of it is that the surveyors are very reluctant to accept, liability for anything that goes wrong. And it's been kind of established law that they don't have a high obligation when it comes to those kind of detailed things. So my advice to anybody buying a house is not only look at the Home Report and open all the drawers and try and look under the floorboards or up in the loft, make a nuisance of yourself, quiz the surveyor within an inch of their lives and say, oh, I noticed in the upstairs bedroom on the left, there was a damp patchAnd the thing, what's all that about? You're entitled to ask the surveyor directly. Try, try, try to do all the detective work at the outset rather than play catch up.
Angela Is it the same with a new build? What sort of come back do you have if you're buying a new house?
Austin: Most builders, and frankly wouldn't go ahead with a new build purchase unless this was the case, are registered with either the National House Builders Council or similar schemes which provide almost a kind of guarantee of workmanship so that if there is a snagging, then the builders themselves can be held to account for that. But if they are reluctant or refuse or go out of business, then the NHBC guarantee that you have, which your solicitor will have assisted in making sure is there, can be called in and almost as kind of independent remedial work can be done. Now, again, that system is not perfect, but it's better than nothing. And I've seen it work very well on everal rather difficult cases over the years. But as the property is being built and before you actually allow the money to be released, go back in and look and check everything and just be that nuisance, nebby and nosy and say, what about that? What about that? And make sure you're happy.
Angela: Okay. Let's just do a bit of a recap on top tips for buying a property, because I think we've covered just about everything now from offer to date of entry. So what are your top tips?
Austin: Top tips are, Yeah. Get ahead of everything. That is finding the property, knowing what kind of property and where you want. So do your research and homework first. Don't just kind of rock up at say an open night for a newly marketed property. Actually pick and choose the properties and the types of property and the places they're located in advance. When you go in to see a property, and this is the weird thing, people will spend more time on a suit of clothes for a couple of hundred pounds than they will, on looking around a house they're going to spend 400,000 pounds on. So in respect for the amount of money that you're going to be spending, check everything. Even the first time you go into look. Now, if you go in and see the property and just, you know, in 5 seconds, it's not gonna be for you. Don't bother doing that. But if you're interested, do your own detective work.
Angela: I think actually, you know, you can test drive a car. Yeah. But you can't go and have an overnight in a house that you're potentially going to live in forever.
Austin: That's right. And and how long are... people in viewing a house 20 minutes half an hour it's kind of bonkers in a way but you know go back for a second viewing and the second viewing can can be more exhaustive but just just be pushy within reason but even take a notebook with you of things that you want to check and and start that process when you come to the offer, offer as much as you are comfortable with so that if you get the property you think i'm glad i offered that much but if you don't get the property you say i'm glad i didn't offer any more that's that's my kind of watch word for it and don't assume your solicitor will know what to to offer they don't and particularly because it's a sealed bid situation. During the course of the transaction keep in touch with your solicitor don't phone them every day but expect that they will keep you posted and if you're wondering about something drop them a note either to the solicitor or the paralegal or the front office and they will keep you updated they should keep you updated proactively anyway. Make sure you've done all your figures properly so that you know what everything is going to cost including your mortgage your legal costs your tax your legal fee etc and when the day of entry comes about prepare to be patient but be available keep your mobile phone on don't go to the pictures or you know go out swimming just be available don't don't hang about your solicitor's office in person but be ready to answer questions or give instructions because you are the boss the solicitors is there as a kind of agent or servant of yours they have the expertise and and the experience but it is your decisions and they will always defer to you and once you're in the property check everything again so that if there is something wrong i mean for example if you go in in the middle of summer then you don't maybe normally put the heating on, put the heating on immediately aand check everything and listen out for noises and look for things and just just try and find fault and if there's not anything you have won a watch and one final thing to say for me it is the best physical and financial investment anybody could ever make so it's worth the pain
Angela: great thanks very much Austin
Austin: my pleasure.
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