Are you a first-time homebuyer or simply in need of a refresher on the conveyancing process?
In this comprehensive guide, we'll help you wrap your head around the legalities involved in buying a home. We'll demystify what conveyancing is, breaking down everything from the role of solicitors and licensed conveyancers to searches and completion.
By the end, you'll be well-equipped to tackle the process with confidence.
What is conveyancing?
Conveyancing is the legal process of transferring ownership of real property (land and/or buildings) from one person to another, or granting an encumbrance, such as a mortgage or lien.
It often refers to the administrative work of gathering information about whether the seller has the right to sell and risks to the property that might affect its value, and the legal work of preparing and executing the written purchase and sale agreement, and then ensuring the transfer of title.
The word 'conveyancing' derives from the word 'convey', which around 1520 started to be used to mean 'to transfer property from one person to another'. The 'ancing' ending makes the verb into a noun to mean 'the end result of the process of conveying'.
Why is conveyancing important?
Conveyancing is important because of the protection that it gives to both the buyer and the seller.
The seller can be certain that the buyer has the money to buy the property, and that it will be transferred when the title deeds to the property are changed.
The buyer can be certain that they know about the risks and obligations that buying the property gives them, be certain of what the property comprises, and, like the seller, be certain that on completion, title is transferred in return for their money.
Key legislation governing conveyancing in the UK
In the UK, conveyancing is regulated by various legislation, including the Law of Property Act 1925, the Land Registration Act 2002, and the Land and Conveyancing Law Reform Act 2009.
The conveyancing process
The process involved in conveyancing can be divided into two major phases: the pre-contract stage and the post-contract stage.
The first phase involves the preparation of the draft sale contract, property searches, and addressing any particular concerns. The buyer needs to know what they are buying.
The second phase is about the smooth transfer of ownership: exchange of contracts, completion, and the legal transfer of title.
Online platforms and email have replaced traditional paper-based methods, allowing the two parties' conveyancers to collaborate and share information and documents more easily. Technology has reduced the time taken to complete property sales and improved the overall client experience.
Key stages in the conveyancing process
Preparation of the draft contract
The first step is the preparation of a draft contract. This is usually done by the seller's conveyancer and based on the Law Society's standard terms and conditions of sale template.
It sets out the terms of the sale, including the price, any special conditions, and the proposed completion day.
The buyer's conveyancer will review the draft contract, raise any enquiries, and negotiate any necessary amendments on behalf of the buyer.
The legal side of the conveyancing procedure involves various tasks, including drafting and reviewing legal documents, as well as liaising with the other party's solicitor. It is crucial for both the buyer's and seller's solicitors to communicate effectively to ensure a smooth process. As a homebuyer, you should be aware of the legal work that your conveyancer will carry out on your behalf.
Searches
Property searches identify potential issues and risks that may affect the value of the property or the buyer's enjoyment of it.
These searches are carried out by the buyer's conveyancer and include:
Local authority searches:
A local land charge register search (LLC1) returns information about any charges or attendant restrictions relating to the property. These may include whether it is a listed building, located in a conservation area, subject to a tree protection order, in need of an improvement or renovation grant, or situated in a smoke control zone. It also shows planning agreements and conditional planning permissions.
A CON29 search gives information about public highways near the property, proposals for new roads and rail schemes, planning decisions, outstanding statutory notices, breaches of planning or building regulations and the existence of any compulsory purchase order. It also returns some information about environmental factors, for example, whether the land is classed as contaminated land or whether there may be Radon gas.
Other searches:
An additional environmental search helps identify other potential environmental risks, including landfill sites, former and current industry, radon gas, and flooding.
Location specific searches are related to the local geography and may include extra searches for mining activity and subsidence. For example, tin mining searches are commonly carried out in Cornwall and Devon, while coal mining searches are required in parts of Wales and Northern England.
A drainage search gives information about the property's connection to public drains and sewers. It is important to know about general sanitation, but also, drains in expected places may affect extensions or other works you plan.
Ground stability issues affect the structural integrity of a property and may result in costly repairs or even make the property uninhabitable. Conveyancers will investigate the risk of subsidence, landslips, or other ground stability concerns to protect the buyer's investment.
A flood risk search reveals the likelihood of flooding at the property and provides information about the potential impact on the property's value and insurance costs. This is a key search for properties in flood-prone areas or those with a history of flooding.
Contaminated land searches identify any previous industrial or commercial uses of the land that may have resulted in pollution or contamination.
Potential leftover medieval liabilities may include a chancel repair liability - an obligation to contribute to the cost of church repairs - and manorial rights - to mine, to carry on a sport such as hunting, shooting and fishing, or rights to hold fairs and markets.
Boundary disputes may impact the enjoyment of a property. The buyer's solicitor will examine the title plan and any available information to ensure that the boundaries are clearly defined and that there are no outstanding disputes with neighbouring properties.
Exchange of Contracts
The exchange of contracts is a crucial milestone in the conveyancing procedure.
At this stage, the buyer typically pays a deposit (usually 10% of the price).
After the seller's solicitor confirms that they have received the buyer's deposit and the parties exchange contracts, both are legally bound to complete the transaction on a specified completion date.
Check for insurance
Mortgage lenders typically require buildings insurance as a condition of their mortgage offer. Your conveyancer or solicitor will ensure you have adequate coverage in place before the completion day.
Completion day
Completion day is the date the buyer takes legal possession of the property.
The completion date is agreed upon during the exchange of contracts and is the deadline for the buyer to pay the remaining balance of the price.
At completion, the seller's conveyancer will confirm receipt of the funds, and the keys to the property are handed over to the buyer.
Legal title transfer
The Land Registry maintains an up-to-date record of legal ownership for properties registered in England and Wales.
Following completion, the buyer's conveyancer will register the new ownership details with the Land Registry, ensuring that the buyer's legal title is properly recorded. This is done by submitting the appropriate forms and paying any required fees.
This process also involves paying any outstanding Stamp Duty Land Tax and ensuring that the property is correctly registered in the buyer's name.
After the sale
Once the conveyancing is complete, it is the buyer's responsibility to settle any outstanding fees, including legal fees and taxes.
Conveyancing fees
What are conveyancing fees?
Conveyancing fees are what you pay to your conveyancer for their services handling the legal work associated with buying or selling a property.
What do they cover?
A conveyancing fee is made up of two parts: the cost of the time that the conveyancer spends on the transaction, and third party expenses, known as disbursements. The latter includes the cost of searches.
How much are typical conveyancing costs?
Conveyancing costs depend on the complexity of the transaction, the value of the property, and the conveyancer's expertise.
For a typical freehold property purchase, conveyancing costs might range from £500 to £1,750 including disbursements. The fee usually covers those searches required by the mortgage provider.
Are they negotiable?
Most firms of conveyancers operate on a fixed fee basis depending on the complexity of the transaction.
You can always try to negotiate fees down or ask if there is any flexibility, but you should bear in mind that conveyancing work is extremely streamlined, and that reductions in fees might equate to a lower level of service.
How to compare conveyancing quotes
When comparing quotes, you should look for:
A breakdown of costs between the legal fee component and the disbursements component.
The experience of the conveyancer who will do the work and their knowledge of the local area. This is the value you receive for the costs.
The communication style of the conveyancer: you can tell a lot from the conveyancing quote about how good they will be at communication during the conveyancing process. Is the information they provide clear and informative? Do they invite you to ask questions? Good communication is important because it ensures that the transaction goes to plan.
Choosing a conveyancer
What is the difference between a conveyancing solicitor and a licensed conveyancer?
The main difference is one of who regulates them.
Conveyancing solicitors are regulated by the Solicitors Regulation Authority (SRA); licensed conveyancers are regulated by the Council for Licensed Conveyancers (CLC).
Solicitors tend to be part of a larger firm of legal professionals and are likely to offer additional, complementary services such as end of life planning.
Licensed conveyancers specialise in property transactions, and as such, may be able to offer lower fees.
Choosing a type of professional
Whether you use a firm of solicitors or a licensed conveyancer usually doesn't matter - the choice comes down to your personal preference and comfort level.
What matters more are:
The availability of your conveyancer and the speed at which the sale can be completed: most sales that fall through also are those that have taken a long time.
Experience: if your transaction is complicated you need someone to make sure that you use someone who is experienced. Make sure that you know who will carry out your work.
Less important is knowledge of the local area. That is unless there are risk factors associated with the area, such as mining.
Although you can change your conveyancer, it is preferable to find one that you'll use for the entire transaction.
Should you use your estate agent's recommended solicitor?
Estate agents usually recommend a solicitor. They may even have a conveyancing services department within their own business.
You are under no obligation to use their suggestion. Be aware that they may be motivated to recommend someone because they receive a referral fee.
Conveyancing for different types of property transactions
Freehold and leasehold
In the UK you can own the freehold or a leasehold.
If you own the freehold, you own the property and the land it sits on.
If you own the leasehold, then you own a lease: a right to live on the land for a certain period of time - possibly up to 999 years.
For a leasehold property, additional work is needed to examine the lease terms, service charges, and ground rent.
The process for conveyancing of a leasehold property is covered in a separate article. Although much of the process is the same, there are additional checks required in respect of the lease.
Buying as a cash buyer, rather than with a mortgage
Your conveyancer has a legal obligation to your mortgage provider, if you buy with one. They must carry out certain work for them, and the bank or building society can rescind a mortgage offer if there is something not right about the property.
Cash buyers can decide whether certain risk areas are important to them or not. So there can be fewer searches carried out, and the sale process can take much less time.
First time buyers
First-time buyers may be eligible for various government schemes, such as the Help to Buy Scheme, which if used, can affect the conveyancing process as any existing Help to Buy equity loan will need to be repaid.
New build properties
New build properties can present unique challenges.
Issues like planning permission, building regulations, and warranties and covenants must be thoroughly examined.
Additionally, a property's value may change during construction if it is bought off-plan, which could change the purchase price and the mortgage offer.
Read whether a new build or an existing property might be better for you.
Tenanted properties
The tenancy has to be considered when buying or selling a property as a landlord. Considerations would include rent collection and compliance with relevant housing laws.
Corporate ownership
When a company buys or sells a property, there may be additional steps in the process such as obtaining board of directors approval at key stages.
Frequently asked questions
Can you do the conveyancing yourself?
Yes. You can do the conveyancing yourself, either as a buyer or a seller.
However, the process can be complex and take up a lot of your time. Mistakes can lead to significant delays, financial loss, or even legal disputes.
Misunderstanding or overlooking legal requirements may result in delays or even void the transaction.
You may incurring additional costs due to errors or omissions or failure to identify risks.
Potential legal disputes may arise from incorrect or incomplete documentation, or failure to check exactly what is being bought.
If you are a buyer, and you are taking out a mortgage, then mortgage providers will insist you use a conveyancer because their risks need to be protected.
What if the sale falls through?
If a property sale falls through, both the buyer and seller may incur financial losses.
Depending on the stage, you may still be responsible for conveyancing fees, survey costs, and other expenses.
It's essential to communicate with your conveyancer and estate agent to determine the best course of action in this situation. You may have to find another buyer, or look for another property.
Do you need a conveyancer when remortgaging?
Yes. You need to use a solicitor or conveyancer when you remortgage. It will be a condition of the new mortgage lender.
Can you pay conveyancing fees on your credit card?
Your conveyancer may accept credit card payments. Others may prefer payment via bank transfer or cheque.
How long does the conveyancing process take?
The whole process typically takes 8-12 weeks, but this can vary depending on the complexity of the property transaction, any issues that arise, and the efficiency of the parties involved.
Your solicitor or conveyancer should keep you updated on the progress and the expected time frame throughout the process.
Common pitfalls and how to avoid them
Some common pitfalls that result in delays include:
- poor communication between parties
- incomplete or inaccurate documentation
- delays in obtaining mortgage approval or the expiry of mortgage offers
- potential issues discovered during searches
Gazumping and gazundering
Gazumping is when a seller accepts a higher offer from another buyer after having already accepted an offer.
Gazundering is when a buyer lowers their offer just before the exchange of contracts.
Both practices can cause delays and additional costs. To mitigate these risks, consider agreeing on a lock-out agreement to prevent gazumping and working closely with your conveyancer and estate agent to ensure a fast exchange of contracts, reducing the risk of gazundering.
Dealing with disputes that may arise
Disputes can arise during the conveyancing process. These may be over property boundaries, undisclosed issues with the property, or disputes over contract terms.
If they do arise, your conveyancer should be able to advise as to a possible resolution.