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Georgesons Estate Agents
WICK
22 Bridge Street
Wick KW1 4NG
T: 01955 602222
F: 01955 603016
TAIN
22 High Street
Tain
IV19 1AE
T: 01862 892555
F: 01862 894861
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Homebuying Info
What you need to know
about buying your home in Scotland
Buying a home is unlike almost any other purchase you will make.
Instead of expecting your home to depreciate in value like a
car or a washing machine you expect it to increase in value,
but unlike any normal investment, such as a savings account,
an insurance policy, or stocks and shares, you expect to have
the everyday use of your ''money'' in the form of the house or
flat you are living in.
Buying property is also more complicated than most of the other
purchases you will make. You will probably be committing yourself
to a loan for anything from 15 to 25 years, to constant insurance
premiums, maintenance costs, and of course all the ''optional
extras'' such as furnishings, decoration, etc.
It is vital, therefore, that you seek and obtain the right sort
of advice as early as possible - as soon as you start thinking
about buying a home, whether it is your first or intended to
be your last.
We can give
you the unbiased advice and help you need - at less cost
than you probably expect. |
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| Disclaimer: The information on these pages
is necessarily general and commonsense dictates that you should
take legal or other advice before acting upon it. No solicitor/client
relationship is created by the reading of the pages. |
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Your
Finances
In order to buy a home you must first have the money or be able
to borrow the money to pay the Price.
In virtually all cases you will require to find a proportion
of the cost yourself. (This proportion is frequently referred
to as "the Deposit''). In most cases it will come either
from your own savings or from the sale proceeds of a previous
home.
In some circumstances, however, it may be money borrowed from
a member of your family or a friend.
Where you are borrowing from a relative or friend it is important
that both the lender and yourself know exactly how much money
is being offered on loan and on what terms. There is nothing
like money for causing family bitterness and lost friends.
With most purchases you will be borrowing much of the price from
a Building Society, Bank or Insurance Company. The loan will
be ''secured"
over the property and is called a "Mortgage'' or , more
properly, in Scotland, a "secured loan".
Where you are dependent on a mortgage, the Building Society or
Bank etc., may arrange for the property to be valued. The cost
of this is your responsibility, but while a valuation may be
half the cost of having your own survey done, remember it does
not give you the same safeguards.
Many people cannot afford a private survey every time they see
a property they like so it is worthwhile contacting your Solicitor,
who can discuss with you where a private survey is advisable
and how you can avoid the full double cost of a private survey
and the lending institution's valuation.
You will of course require a valuation for your mortgage even
with a new property and a private survey may be of assistance
in relation to the future investment potential of the property
and any aspects of the building which are of immediate importance.
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Making
an Offer
Once you have decided that you would like to buy a particular
property you will have to make a formal offer in writing.
If your offer is accepted it is a binding contract under Scots
Law and you may not have an opportunity for second thoughts.
It is therefore vital that you seek Professional advice to ensure
that you will have enough money to go through with the purchase
and that all the necessary conditions governing the contract
are included.
With a new property, you will normally be presented with a pre-printed
Form of Offer. You should never sign until you have gone over
the conditions with your solicitor and are satisfied that the
formal contract reflects your understanding of the agreement
with the builder and that the necessary finance is available
to pay the price. Most offers follow a similar format, but remember
that these are designed to deal with all the sales of a particular
development and not your specific transaction. Accordingly, if
you are agreeing variations on the basic plan, any extra features,
or the like, you will wish to ensure that your contractual rights
are contained in the contract.
In addition to any special conditions relating to your transaction,
the conditions of offers relating to house purchase in Scotland
are likely to include clauses relating to the following:
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The
price
Most properties are advertised in Scotland at "offers
over" a certain figure. This usually implies that
the seller expects to receive a sum in excess of the asking price.
The actual price you will have to pay may be considerably higher
than the start price and your solicitor can often be of assistance
in providing guidance as to the actual price you may have to
offer.
Some properties, in particular new houses, are sold at a "fixed
price". You should always remember that simply because a
property is advertised at a ''fixed
price" it does not mean that a valuation by a surveyor
will be as high as that price.
Where the property is being sold without a fixed price you will
have to decide the price that you wish to offer. The following
may be of assistance:
Before you come to make an offer you will probably have looked
at a number of properties and you will have an idea of what
you would be prepared to offer were money no object. You
can therefore decide a price at which you would say to yourself "If
I don't get it for that I don't want it''.
You can also calculate how much you
can actually afford. The formula is: Take the maximum
amount of mortgage you are being offered in respect of the particular
property and add your savings and any family loan or other money
available. (if you have a property to sell your Solicitor will
be able to advise you as to what amount you are likely to have
available from the sale after expenses, etc.). From the total,
deduct the amount of money you will require for removal costs,
furnishings, etc. and the expenses of the purchase transaction.
Your solicitor can advise on this. The sum remaining after these
calculations is the maximum amount
you can afford.
If you have done the above calculations you now have two prices:
1. Money no object; and 2. What you can afford. The lower of
these two figures is the most you should offer for the property
as being "your best offer".
In some cases you may decide, or be advised to offer something
less than your best offer, but remember that you may not get
a second chance. At least with your best offer there need not
be any tears if your offer is not successful. After all, if you
were not prepared (or able) to pay any more you will not say
to yourself -"Perhaps if I had offered a few hundred more
. . ."
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The
entry date
The entry date is the date when you wish to get the keys and
occupation of the property.
It is also the date when the price is payable in full. To a seller,
the date when he or she expects to get the price can be as important
as the actual amount of money, so you should try to find out
from the seller what his or her wishes are and try to come as
close to these as possible.
With a new property, the date of entry may not be known at the
time of your offer. Instead the date will generally be linked
to the date of completion. It is vital that the contract accurately
reflects the position since it might otherwise be that the Builder
claims the property is complete, while the lender claims it is
not and refuses to part with the loan until additional work is
carried out. In addition the Local Authority will themselves
determine when the property is ''habitable''.
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Moveables
Frequently a seller is prepared or wishes to leave moveable items
with the property being sold.
The law defining ''moveables'' is complex, but a rough rule of
thumb is that where an item is screwed to the wall etc. of the
property it is presumed to be part of the property itself, e.g.
door handles, fitted fire surrounds etc.
Moveables are most commonly carpets, curtains and pieces of furniture
or household equipment (e.g. a cooker).
It is desirable to avoid any misunderstandings and you should
therefore try to establish exactly what the seller is prepared
to leave and what he or she intends to remove. It is all too
easy to believe that the seller is leaving a beautiful fitted
carpet in the master bedroom only to find on getting the keys
that the seller has, in fact, left the threadbare carpet in the
second bedroom.
Sometimes a builder will offer -white goods'' or carpets with
a new house and it may be important to specify exactly what you
are entitled to expect and what guarantees (if any) are available
for equipment, etc.
It may be possible in some cases to divide the price being paid
between the property and the moveable items, thereby saving in
some cases, Stamp Duty or at least part of the Stamp Duty.
But, remember that it is not only illegal to misrepresent the
price of the house, but also the amount of your mortgage may
depend on how much you are paying for the property and by apportioning
the price between the property and moveables you may inadvertently
reduce the amount of your mortgage.
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Transfer
of Title
It is important that the seller grants a valid Title in your
favour to the property, so that you know that no one will contest
your Title and that you will be able to sell the property without
incurring additional legal fees for sorting our any defect.
A valid Title is also essential in order to obtain your mortgage
and the loan cheque cannot be cashed by your solicitor until
there is a valid Title in your name.
The Deed transferring the Title is only granted in exchange for
the full price and so it follows that you cannot use your mortgage
funds to finance a payment to account to get entry to your new
home.
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Conditions
of Title
Land, houses etc. in Scotland are usually sold subject to conditions.
These may require the owner to do something (e.g. put up a fence)
or not to do something (e.g. not to carry on any business activity
from a residential property). They may also specify continuing
obligations re maintenance or insurance.
With new properties, the builder may be imposing a new set of
conditions dealing either with your specific property or the
whole development.
In all cases you want to know if there will be any unusual conditions
or continuing obligations which will involve you in future expense.
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Planning,
Environmental Health, etc.
Properties may be affected by planning proposals or requirements
of Statutory Bodies such as the Local Authority. New properties
will be subject to the conditions on which planning permission
was granted and the Building Control Regulations. The basic rule
is that the purchaser is responsible for satisfying him or herself
that the enjoyment of the property will not be adversely affected
by any such proposals, requirements, conditions or regulations.
So it is up to you to check the position or have your solicitor
check it out for you.
The formal offer can, however, make it a condition of the contract
that the seller inform you before completing a binding contract
of any formal Statutory Notices intimated to him or her prior
to the acceptance of your offer.
The loveliest dream cottage can be turned into a nightmare by
plans to build a motorway outside the front door.
Maintenance, Repairs, etc.
With ''second-hand'' or older properties it is
advisable to ensure by contract that the seller will
be responsible for any outstanding charges for repairs
or maintenance affecting the property carried out or
instructed prior to the date of entry.
Where major works have been carried out with Local Authority
Grant Aid, special provisions may be required in order to ensure
that the grant will be available when the bills are rendered.
After all you do not want to be surprised by a demand for payment
for last year's re-roofing.
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Acceptance
of your offer
Your Offer, unless it states otherwise, may be accepted at any
time. It is normal therefore to include a time limit for acceptance.
The actual time limit will depend on the individual circumstances
of each case, e.g. whether or not the seller has fixed a date
and time by which your offer must be lodged to ensure that it
will be considered (generally referred to as a "closing
date''). Your solicitor will be able to advise you on this.
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A
verbal or informal offer can be a binding contract
Avoid handshaking until you have seen your Solicitor. Be very
careful of making verbal or informal agreements about the purchase
of a home. Apart from any other misunderstanding the sum you
mention may be used to push up the offer of another interested
party.
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Payments
to Account and Bridging Loans
At settlement of the purchase the price is exchanged for the
Title and possession of the property. There may be circumstances,
however, where you want to take entry to the property but do
not have the full price available. In such cases it may be necessary
to arrange either a "payment to account'' of the price or
a ''bridging loan''.
Payments to Account: Since,
under Scots Law, there is a binding contract between
the purchaser and the seller, the seller may let the
purchaser take entry in exchange for a payment to account
of the full price.
The size of the payment to account is subject to negotiation
and (because you get the full use of the property but the seller
only gets part of the price) interest on the outstanding balance
is usually payable to the seller. The rate of interest will depend
on the circumstances in each case. This facility is not usually
available in connection with a purchase from a builder or developer.
Bridging Loans: There
may be circumstances where the seller refuses to let
you have entry without payment of the price in full.
It may then be necessary for you to obtain a -Bridging
Loan'' from a Bank.
A Bridging Loan is basically an overdraft, but is generally only
obtainable where the Bank know roughly how long it will be needed
and where the money to repay it is coming from -a house sale
or mortgage. Interest is normally at overdraft rates.
In most cases the interest payable in terms of any payment to
account or bridging loan is eligible for Income Tax relief on
a similar basis as a mortgage.
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After
you get the Keys
Whether you are buying a new property or an older one, you should
check the property as quickly as possible. If there are any unexpected
problems you should contact your solicitor as soon as possible.
Where equipment is included in the sale and the seller has warranted
that this is in working order, remember to check by turning the
equipment on.
With new properties you will probably begin to notice minor defects
appearing over a period of time, e.g. cracking of plaster work,
shrinkage of door or window frames. This is perfectly normal,
but you should notify the site agent or builder as soon as you
spot a problem. These types of minor defects are usually referred
to as "snagging''.
A reputable builder will arrange for repairs to be carried out,
but it will not always be convenient or economic for this to
be done immediately. The builder will wish to wait a reasonable
period of time to ensure that all such problems have materialised
and then arrange for them all to be dealt with at the one time.
However, you should keep a note of all the defects that you have
reported and, if you feel that there has been unreasonable delay,
contact the solicitor who acted for you for assistance.
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