Buying a house in UK is exciting yet an equally daunting experience – especially, if you are a first-time buyer. Finding a suitable property, spending countless hours wading through online property portals and comparing different properties to find “the one” amongst all, is tiring. After this starts the property buying process that involves property viewing, arranging a mortgage and completing paper-work – and it all seems like a never-ending maze.
From finding the right property in UK to collecting the keys, the process is long but management at every step is the key. Though the UK property market has evolved with time but the actual process of buying a property in UK is not much changed. Before undertaking financial commitment and stepping up on the property buying ladder, we can suggest you not rush into it. Sit back and comprehend the UK property buying process to ensure that the entire purchase process goes as smoothly as possible.
To simplify the UK property buying experience, we have put together a step-by-step guide. It will help you understand what to expect at every step.
Decide if buying a property in UK is right for you?
More than 80% of the total population in the UK want to buy their own home but buying is not always the right decision. Homeownership percentage rose in the country after the Right-to-Buy scheme was introduced in 1980, where council tenants were asked to buy their rental homes at a discounted rate. With time, the prices of properties for sale in UK increased tremendously leaving people with little room to buy their own homes. Resultantly, the average age of first-time property buyers has also risen in recent years.
Before starting with why investing in London real estate or UK properties is a viable investment decision, you must ask yourself several other questions. For instance, estate agents in UK suggest that before setting off on a property buying journey, you must ask yourself whether home buying is right for you or not.
How much can you afford?
Before buying property in UK, you must know what is the maximum price of the property that you can afford. It must be a fine balance between what you have as a deposit and what you will be allowed to borrow in terms of a mortgage. Remember, it is not worth overstretching yourself to make a given property affordable for you so, do your calculation in advance about the income drop (if any) and interest rate rise.
Your savings will have to blanket the deposit, Stamp duty and other costs to complete the transaction, while your income must cover other on-going costs including your monthly home expenses, and mortgage fees. Other costs such as home shifting and home décor can put additional restraint on your budget.
Get mortgage ready
It is never too late to start applying for a mortgage, once you start the property buying process in the UK. First, it is time-consuming, secondly, you will have to check different mortgage brokers to find the right product. This is an official estimate of how much you can borrow from the lender. After reaching a final decision, you will get a mortgage in principle, which is the total amount that the lender will offer you and the interest rate that you will pay.
In several cases, you will have to pay a certain amount as a booking fee to reserve the mortgage you want. Though a mortgage in principle is not binding but property agents in UK take the buyer seriously, as it shows your commitment to buy a property. Now you are in a better position to search a property within your budget and make a realistic offer.
Understand the costs to buy properties for sale in UK
Like mortgage approval and budget decision, it is one of the most important steps that you must have a good idea of, before even starting to look into the available properties for sale in UK. The costs associated with buying a property or home in UK can be categorized into two sections: upfront costs and on-going costs. The upfront costs are:
| Category | Fee |
| Stamp Duty | Applies on every property purchase over £125,000 at a rate of 2-12%
And 3-13% on the purchase of second homes or buy-to-let properties |
| Deposit | In case of mortgage-based property purchase in UK, a deposit is needed between 5-40% of the property price |
| Mortgage | Several fees come under this head including arrangement fee, booking fee, and valuation fee. It usually costs a couple of thousand of pounds to the buyer. |
| Legal Fee | A property buyer needs to hire a legal solicitor to act on your behalf and the fee can be any amount more than £1,000. |
| Land Registry Fee | The fee paid to the UK government to transfer the property’s legal deeds to the new property owner. Your solicitor will give you a clear idea about this figure. |
On the other hand, on-going costs are monthly mortgage repayment, maintenance and repair costs, and regular bills including council tax and utility bills.
Find a property for sale in UK
Once you are done with the pre-requisites, the most fun yet the most time-consuming part starts i.e. house hunting. Now when you are clear about your budget, you can decide where you want to live. Location is the most important part of property buying process. It can decide whether buying a property for sale in UK can save you or cost you many thousands of pounds. Therefore, consider what areas can be profitable for you in terms of living and selling your property ahead (if you want in future).
A few important factors to consider before choosing a neighbourhood include proximity to schools, local transport connections and other amenities including parks, restaurants, supermarkets and healthcare facilities. Though commuting is one of the most crucial factors but estate agents suggest looking further along the same train, tube or tram line, if you cannot afford a house in UK in your preferred neighbourhood.
Even though you must compare different locations in terms of offerings, you must not forget your budget when it comes to short-listing the properties for sale in UK.
Register with estate agents in UK
Once you have shortlisted an area (or areas) where you are interested to buy a house, register yourself with local estate agents. Registering with estate agents is not compulsory but free and can be helpful in several ways. Keeping in touch with local estate agents could increase your chances of finding an ideal house for sale in UK.
It is also because several properties do not make it to the online property portals and estate agents also prefer contacting registered buyers before listing a property online.
Arrange a property viewing
Though in the post-pandemic era, having an access to 360 degree views of your selected property or arranging a virtual viewing is a norm but viewing a property can be tricky. Now when COVID-related restrictions are not there, try to arrange a viewing in person. It will help you see the property for sale in UK in the current state and condition and make it easier for you to ask questions about the property, its history and anything else that can concern you.
No matter how long it takes, but always ask your property agent to arrange a property viewing in person. Moreover, before starting the property viewing process, take along the industry experts or acquire abundant knowledge of the list of concerns that you must watch out for.
Mostly, property owners hire professional home staging services to make a house for sale in UK appear flawless and neat but do not be deceived by the looks. The dampness and subsidence are the two major issues that you must be aware of during the viewing. Otherwise, you will have to pay a hefty amount for expensive structural work to make this property liveable for your family.
Make an offer
Once you have found your dream property in UK, it is the right time to make an offer. Never underestimate the value of an estate agent as you should always make an offer through them and never directly to the seller. Only a property broker will help you secure that property at the most reasonable price. However, if your first offer is rejected by the seller, you can offer again with a higher amount and both parties will eventually meet in the middle.
All you need is to move quickly to beat the competition from other prospects – either by offering more money or by being in a better position.
Hire a conveyancer / surveyor
Once your offer is accepted, its time to move to the next step. You need to hire a solicitor or conveyancer to handle the legal work to transfer property ownership to you. The conveyancer or surveyor will evaluate the property value and check for problems that can affect the total price of the home. After paying an upfront deposit to hire the surveyor / conveyancer services, the conveyancer will submit his findings to the local council to check, whether there are any planning or local issues that can also affect the property’s value.
Your mortgage lender will also require a mortgage valuation by a surveyor to ensure that the property is good enough to lend against. It is just a superficial survey and does not go in-depth to find out other problems. Though it is not compulsory to get the valuation done but it is worth getting it done to overrule any hidden problems.
Finalize the offer and arrange a deposit
Once the survey is complete and based on the survey findings, you can re-negotiate the property price, if you can.
Meanwhile, you will have to arrange a deposit of usually 10% of the sale price of the property. And around this time, you must also receive your mortgage offer along with all the terms and conditions surrounding your mortgage. You will have to arrange this before exchanging contracts.
Sign and exchange contracts
Before reaching the agreed completion date, you will have to sign and exchange contracts with your seller. Mostly people exchange contracts a week or two before the completion date. Before signing the contract, the real estate experts suggest sitting with your solicitor and checking that all the details are correct. The rental costs in UK are also very high but recently rent for offices in Dubai spiked higher in Dubai than UK.
If everything is perfect, your solicitor will give you a contract to sign and then you can exchange. Meanwhile, your solicitor will transfer your exchange deposit to the seller’s solicitor.
Note: This is the time of (almost) no return. Neither buyer nor the seller can pull out of the sale without severe consequences. Both parties will have to bear financial consequences, in case one withdraws the deal. Therefore, it is extremely rare for this to happen.
Complete the sale
The entire process has not yet come to an end because completion is only when you pay for the property for sale in UK and take ownership of it. And it takes place at a certain time of day. On the day of completion, the remaining money is transferred and the deeds of the property are also transferred, between both parties’ conveyancers.
Final steps to close the deal
Once your solicitor sends the remaining amount to the seller’s solicitor after paying your exchange deposit, the solicitor will be given the title deeds of the property along with proof that the seller’s mortgage has been paid off.
The property is yours now!
After completion, the solicitor / conveyancer will send you an account – covering all their costs and the purchase price of the property and stamp duty. Normally, the solicitor pays off the stamp duty on your behalf to ensure that the change of ownership is registered with the land registry. You will have to pay or get a refund from the solicitor – depending upon the amount you have paid to the solicitor.
The keys will be released now! You will have 14 days from the completion date to file the Stamp Duty Land Tax Return and pay any tax due in England and Northern Ireland.
