One of the best things you can do to prepare buying or selling a house is research what it will cost.
As soon as an offer has been accepted, the buyer will be keen on starting the process of transferring ownership. This process is called conveyancing.
Conveyancing is largely legal and complicated.
Therefore, it is usually carried out by a conveyancer. The conveyancer can either be a solicitor or a licensed conveyancer. Whether you need a solicitor or a licensed conveyancer generally depends on the complexity of the transaction. Find out more about in our article, using licensed conveyancers instead of solicitor.
If you are a cash buyer, it is also possible to do it yourself. However, you need to be aware of a few things before you decide to take the DIY conveyancing route.
Further, if you are taking out a mortgage, your lender will most likely require you to hire a conveyancer on their panel. The conveyancer will charge a fee, which can add substantial cost to your property transaction.
This article takes a closer look at conveyancing fees. It breaks down the fundamental elements of conveyancing fees. It discusses whether you need to hire a conveyancer and how much you will have to pay your conveyancer if the sale falls through.
How much does conveyancing cost?
Conveyancing fees are the amount you will be paying your conveyancer for carrying out the legal and administrative side of conveyancing on your behalf.
Conveyancing fees will include two components:
- Legal fees - The fees charged by the conveyancer (for his or her services); and
- Disbursements - Payments to third parties for their services such as for local authority search and HM Land Registry search.
First, we will tackle the legal fees component of conveyancing fees and discuss how much you should expect to pay in these legal fees.
Then we will move on to discussing what disbursements are and elaborate on the main types of disbursements to help you get an idea of how much the property transaction will cost.
There is no hard and fast rule regarding how much conveyancer can charge in legal fee for a property transaction. Nevertheless, average conveyancing fees of a conveyancer can be between £700-£1500 for the purchase or sale of an average freehold property.
If you are purchasing a leasehold property, then expect the average conveyancing fees to be higher since it involves a lot more legal work and effort.
Further, it would be wise to remember at all times that a high legal fee does not automatically equal great service.
Likewise, anything that is too cheap should be approached with a pinch of salt and high caution. Even though the initial conveyancing quotes may appear to be low, you might end up paying a lot over.
Additionally, conveyancing solicitors are likely to charge a higher legal fee as compared to licensed conveyancers. One reason that solicitors fees are higher is that a conveyancing solicitor can offer a wider breath of legal services. For example, when it comes to issues of probate or inheritence, a conveyancing solicitor may not be able to advise you properly.
Now let’s move on to disbursements.
There is no absolute definition for it. However, conveyancing disbursements can be described as items your conveyancer will pay for to third parties while conducting your sale or purchase.
The main disbursements are relatively cheap, and you will be given an estimate of the costs to be incurred in disbursements. So a conveyancer may not ask the client for approval before incurring small disbursements.
The main conveyancing disbursements are as follows:
Anti-money laundering check
This process verifies your identity and is usually done by online companies. You will incur costs for the anti-money launder legal checks, which you will have to carry out.
Cost of searches
One of the main elements in the conveyancing process is the different searches done by the buyer’s conveyancers after his (or her) offer has been accepted and before the parties exchange contracts.
This will include, amongst other things, local authority search, HM Land Registry search, environmental search, and water and drainage search.
To learn which searches are required and why you need them, read our article on local authority searches.
If you are a cash buyer, you don’t need to get a bankruptcy search.
However, if you are taking out a mortgage, your mortgage lender will want to know that everyone named on the mortgage has not been declared bankrupt or is about to be declared bankrupt.
Cost of title deed
If you are the seller, you will need a copy of the title deeds held by the Land Registry. The title deeds are included in the information pack, which is sent to the buyer’s solicitor by the seller's solicitor once the conveyancing process starts. If the property is a leasehold property, the cost of getting a copy will be higher (as the title deeds may consist of several documents).
If you are the buyer, you may want to get an updated copy of the title deeds once the conveyancing process is complete.
You can find the exact fees for getting a copy made here.
Transfer of ownership at Land Registry
If you are the buyer, your conveyancer will have to pay the Land Registry charges (called the "land registry fee") for transferring the ownership. The land registry fees is payable after completion of the property transaction.
Stamp Duty Land Tax (STLT)
You may need to pay stamp duty land tax if you are the buyer and the purchase price crosses the STLT threshold. However, in some circumstances, you do not have to pay stamp duty.
You can find out if you are liable to pay stamp duty by reading our article on what is stamp duty.
There are also ways to mitigate stamp duty. You can learn what they are in our article on stamp duty mitigation.
Bank transfer fee
During the conveyancing process, you will either have to make payments to the seller or to your mortgage lender (to pay off your current mortgage) using telegraphic transfer. Your conveyancer will charge a fee (called "telegraphic transfer fee") for performing the transfer, plus the bank transfer fees.
Bank transfer fee vary depending on the bank.
Charges for leasehold properties
If you are buying a leasehold property, your freeholder may charge a fee for registering a change of ownership.
Further, you may also need to pay for a Deed of Covenant.
Your conveyancer will also reach out to the landlord or the managing agent to get information about the service charges or management details. This will set you also set you back a few hundred pounds.
When do Conveyancing fees have to be paid?
Conveyancing fees are usually paid towards the end of the transaction after completion. However, you may be asked to pay a deposit when you initially hire the conveyancer. Further, you may be asked to pay up front for certain things such as local authority searches or environmental searches.
The stamp duty (if applicable) will need to be paid within fourteen (14) days of completion. Your conveyancer may pay the stamp duty on your behalf as part of their conveyancing service and add the cost to their fees.
However, the buyer is ultimately responsible for submitting the certificate of value (which notified HMRC of the transaction) and ensuring that the requisite tax has been paid.
Do you have to pay conveyancing fees if your sale falls through?
If your orioerty purchase or house sale falls through, depending on your agreement with your conveyancer, you will also need to pay the requisite charges.
No sale no fee
Some conveyancers work on a “no sale, no fee guarantee” basis.
This does not mean that you do not have to pay anything if your sale falls through. It only means that the conveyancer will waive his or her legal fees.
You can learn more about how no sale no fee conveyancing works and which type of conveyancers are more likely to offer such an arrangement.
How to save on conveyancing fees
Conveyancing is a process (and not a skill). Although experience can be valuable to identify potential problems.
Some may think that they can do their own conveyancing in order to save on conveyancing fees. However, in reality, the only thing they will be saving on is the legal fees. Instead, they take over a huge responsibility (for which they may also lack knowledge and experience).
When moving houses, you will have a ton on your mind and may be under tremendous stress.
Conveyancing is a largely complicated process, and each step needs to be carried out diligently. So it may not be wise to take on the conveyancing process yourself (particularly if you lack experience in property law) just to save on legal fees.
Do you really need a conveyancer?
There is no legal requirement to hire a conveyancer. However, if you require a mortgage, you may not find any lender who will be willing to extend the loan if you plan on doing the conveyancing process yourself.
Generally, mortgage lenders will require you to hire a conveyancer who is on their panel. So that the conveyancer can act for the lender as well to make things easier. Otherwise, your lender may charge you an additional few hundred pounds.
Conveyancer recommended by your estate agent
Your estate agent may also refer a conveyancer.
However, you should know that most agents get referral fees from conveyancers who send them clients. Therefore, the agent’s recommendation may not purely be based on your interest, rather on his or her own financial gains.
The bottom line
The best thing you can do to save on conveyancing fees is to go shop around and compare conveyancing quotes to find the best deal.
Do you need a conveyancer to transfer equity?
Transfer of equity means either adding or removing a person or persons from the title deeds of the property (to reflect the alteration of ownership) without necessarily involving any transfer of consideration or money.
While a transfer of equity process is simpler than a standard property sale or purchase, it still involves a lot of legal work.
If there is no mortgage to pay on the property, the process is straightforward. All parties will have to sign the TR1 form and file it with the HM Land Registry, along with the AP1 form and stamp duty certificate (if stamp duty is applicable).
If there is a mortgage on the property, the mortgage lender will have to consent to the transfer of equity. If someone is being added, the lender would like that person to be equally liable for mortgage repayments. Further, the lender would also like to know that the person is not involved in any bankruptcy proceedings. On the contrary, if someone is being removed, the lender will want to ensure that the remaining parties are financially capable of repaying the loan.
In short, you will likely need a conveyancer if you are transferring equity on real property.
If you are changing your mortgage deal (called "remortgaging"), you will face conveyancing costs associated with remortgaging as well. Find out what these are in our how to remortgage guide.
A few last words on conveyancing fees
When it comes to property transactions, the best thing you can do is plan ahead for your costs.
We hope that by breaking down the elements of conveyancing fees, you can get a fair idea of how much you should expect to pay in conveyancing fees in a property transaction or even if you are just transferring equity.
The only way to save on conveyancing fees is to shop around as much as possible to find the best deal. Once you think you have found a good deal, read the contract thoroughly to understand the fee structure and ask any questions you may have before signing the conveyancer contract.