There’s little point negotiating a sale if you aren’t prepared for what you can do with the money you receive. This page shows a checklist of some of the issues to consider.
What they do
Once we reach agreement on how much you are selling for, you will need a solicitor to transfer ownership over to the buyer in exchange for however much money is agreed. Normally, the same solicitor would also help you in your purchase of somewhere else.
Solicitors reasonable costs for your sale will be payable by whoever buys your property. Similarly, solicitors costs for your purchase are recoverable in disturbance compensation. All of the firms on our panel charge at reasonable levels.
The solicitor will not complete your sale until you have somewhere to move to.
It is sensible to start the process of selling as soon as possible after you have agreed a sale. Don’t complete it until you’re ready or have to. By starting it early, when you do find somewhere to buy, you’re more likely to have an offer accepted.
Below is an example of a typical process from reaching agreement on how much you’re selling at to completion of a sale and a related purchase.
Stage 01 – Instructing your solicitor
Stage 02 – Solicitors receive draft contract
Stage 03 – Solicitors receive enquires from buyers
Stage 04 – Local searches (if you are buying)
Stage 05 – Solicitors report (if you are buying)
Stage 06 – Mortgage valuation/survey and offer (if you are buying)
Stage 07 – Redemption figures for Mortgages and other debts
Stage 08 – Signing the Contract and a Transfer form
Stage 09 – Exchange of contracts
Stage 10 – Completion date is agreed
Stage 11 – Sale and any related purchase complete
Stage 12 – Post completion formalities
When buying somewhere, it’s important you understand how much your budget is. As well as the up front costs in buying, it is also worthwhile considering the annual running costs. For example, what’s the service charge, ground rent, council tax and likely utility bills? What about your travel costs in getting to places you regularly attend such as your children’s school, your place or work, hospital or local shops.
The below illustration is indicative for the up front costs. It assumes that your solicitors costs for the sale are paid separately by whoever is buying your property. It is rather simplistic so will not account for everything but should hopefully prove a useful guide.
If you are selling to Heathrow Airport, please see our budget calculator on our Heathrow page. Click here for information
What happens when you sell
In nearly all cases, if you sell a property, you have to pay off any outstanding mortgage debts. Some mortgages are portable to a new property meaning you can simply keep your existing mortgage. Most however are not. This means potentially taking a new mortgage when you buy elsewhere. With mortgage interest rates at an almost all time low, this is a good opportunity to take advantage of low monthly costs.
Terms new mortgages are on
New mortgages can be taken for varying terms, with some as little as 3 years and some as long as 40 years. In general, the longer the mortgage term, the lower the monthly cost is but the more interest is paid in total.
Mortgage costs can vary over time and it is worthwhile taking professional advice from a Mortgage advisor or broker to find out all of the terms.
Don’t simply think you can only use your existing bank. There may be far better deals available elsewhere that a Mortgage broker can find for you.
Most mortgage lenders look at your income and expenditure rather than merely your salary to determine how much you can borrow. As a rule of thumb though, it often works out as between 3 and 5 times your household income before tax.
Check out our mortgage calculator below for an idea of costs. Please remember that mortgage costs can increase over time and make sure that you can afford any costs you incur.
Stamp duty is the tax paid when buying a property.
Under Compulsory Purchase rules, it is normally recoverable up to a cap of whatever the rate would be if you were buying somewhere the same price. For example, if are selling your main home at £300,000 and bought somewhere the same price or less, you would be entitled to recover the full stamp duty you pay in disturbance compensation. However, if you bought somewhere else at a higher price, you would pay the difference. If you bought at £400,000, you would be paying £10,000 but only recovering £5,000.
In our budget calculator above, the stamp duty not recoverable here would be a further £5,000 (£10,000 minus £5,000). However, if you are buying a shared equity property, often we are able to negotiate the excess stamp duty is also payable by whoever buys your property.
**** FROM 8TH JULY 2020 UNTIL 31ST MARCH 2021, THERE IS A TEMPORARY SUSPENSION ON STAMP DUTY AT PROPERTIES UNDER £500,000. THE 3% SURCHARGE FOR INVESTMENT PROPERTIES AND SECOND HOMES HOWEVER STILL APPLIES.
THE BELOW CALCULATOR DOES NOT TAKE THE TEMPORARY SUSPENSION INTO ACCOUNT *****
Our Stamp duty calculator below provides a useful explanation.
This is often the fun bit. Also challenging, exciting and at times frustrating.
Most Council estates we work on are demolished at least in part because property values nearby are higher than those on the estate itself. It may therefore be very difficult to buy somewhere just round the corner.
Looking for somewhere
With a limited amount of properties available for sale, it is important to try and be flexible where you can. For example, if you want to buy within mile, considering expanding search criteria on websites like Rightmove or Zoopla to within 3 miles. You may for example find the perfect property only 1.1 miles away which you would otherwise miss.
Similarly, being flexible with number of bedrooms on property searches can be helpful. Sometimes 2 bedroom properties can be easily converted to 3 bedroom properties and may even be larger.
We suggest checking property portals such as Rightmove and Zoopla.
Register with suitable estate agents
Also, find out which estate agents are most active in the areas you want to buy in and register your details with them. That way, they’ll call you when something suitable comes up. Doing so with four or five agents can help you beat others to properties that are new to the market. Be careful not to register with too many though as you could end up being inundated with calls.
When you find somewhere you want to offer on
You can make an offer directly to the estate agent. Most owners expect some negotiations so allow flexibility with the asking price.
If you have an offer accepted, you’ll need to let the estate agent know which solicitors you are using. Some estate agents may try to pressure you into using solicitors on their panel. You don’t have to. If you choose a solicitor on our panel, they are all able to deal with your purchase as well as your sale.
When you find somewhere to buy, it is advisable to get it checked out. A Valuation report will inform you of the Market Value to make sure what you’re paying is a fair price. Some, including those that we provide also provide a general commentary on any areas of concern. For example, they may recommend that expert advice is provided on a potential problem with the property you are buying.
A Survey is more detailed into the condition of the building. Some provide a valuation figure, some do not. A Building Survey is the most detailed, with the most popular being a Home Buyers report. Surveys are often more expensive than Valuation reports, the cost of which may not always be recoverable. Taking the right sort of report for the right sort of property is important. For example, if you are buying an 18th Century detached house, a building survey may be advisable. However, if you are buying a brand new property, it most likely would be overkill. We can of course advise on which sort of report is appropriate so pick up the phone and ask us anything you’re not sure about.
If you would like us to provide you with a Valuation report, please see the below document or pick up the phone and talk to us.
INSTRUCT US TO UNDERTAKE A VALUATION
Why you need to evict your tenant
Evicting your tenant may not always be easy but it is unfortunately necessary. Sales are negotiated on the basis of vacant possession so buyers often won’t buy if the tenant is still there. If they do, they’ll normally look to reduce the price. If your tenant is in receipt of benefits, they may find it difficult to find elsewhere so it may be even more likely that you need to go through a formal eviction procedure. Renting to tenants on benefits can be a double edged sword. Quite often you receive a good rental income for the property, with the rent guaranteed by the local Council. However, when you sell, you may be more likely to have to go through formal eviction proceedings.
How you evict your tenant
The amount of times Landlords have told us that their tenants will leave voluntarily because they have a good relationship with them but then haven’t is quite scary. Similarly, the amount of times Landlords have tried a DIY eviction and been caught out by recent tenant friendly changes to the law is also worrying. Its quite often these beliefs of doing it on the cheap that end up in the horror stories that you see on TV, with Landlords paying and losing thousands of pounds to secure vacant possession. Well it doesn’t need to be like that.
Teaming up with specialists
We recommend the use of specialist eviction companies. They are typically far cheaper and far more efficient than using a local firm of solicitors would be. As they charge in stages, you also only pay for the part of the service you need. If for example a tenant moves out after service of the original notice, you only pay for that. In most instances, we find landlords end up paying for the majority but not all of the eviction process. We’d much rather they didn’t have to pay anything at all. However, we’d also much rather our Landlords pay for a professional service that ends up saving them a lot in the long run.
The two companies we work with are Landlord Action and Hector & Finch. Both do a similar service. Landlord Action are a little more expensive but are solicitors so are regulated whilst Hector & Finch as non solicitors are not regulated.