Common mistakes people make when moving house ( and how to avoid them)

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1 Common mistakes people make when moving house ( and how to avoid them) For many people buying or selling a home is an extremely stressful experience. Usually the process involves a chain of transactions which extend beyond your immediate control. Timing, negotiation (and often a sense of humour!) all play a vital part in achieving a successful outcome. This short guide has been created to provide some helpful tips to make the process as pain free as possible. 1

2 Introduction It is often claimed that buying a home is as stressful as a divorce, and only marginally less stressful than suffering a bereavement. The sale or purchase of any home is a personal experience and where emotions are involved it is understandable that stress levels may rise. With so much financially and emotionally invested in the sale or purchase of a new home, and so much of the process often out of your own hands, it is important to take control of the elements you can. At Linder Myers our expert residential conveyancing property solicitors have prepared this short guide to provide you with some top-tips to ensure that whether you are buying or selling your home, your transaction proceeds as smoothly as possible. Please note that this guide has been prepared as a general overview. It is for guidance only and should not be considered a substitute for legal or financial advice.

3 Top tips for buyers and sellers Take the time to choose the right solicitor A sensible way of choosing a solicitor is by personal recommendation. For example a friend, family member or work colleague may be able to recommend a particular firm they have used. It is always worth taking the time to talk to any potential solicitor to ensure that they: Are committed to keeping you informed and responding quickly to any queries you may have Adopt a very friendly, approachable and proactive approach to your transaction Are efficient and cost-effective at all times Offer a transparent and competitive approach to costs Deliver a high quality service Check the chain of transactions at the outset One of the most frustrating parts of buying or selling a home is where the transaction falls down through no fault of your own. With this in mind it is important to ensure that the chain of buyers and sellers is complete both below and above you and that everyone is in a position to proceed. Normally your Estate Agent will be able to confirm this for you. 3

4 Make sure you understand the legal terminology Exchange and Completion are the key dates in any transaction. Exchange is the date on which contracts for the sale or purchase are exchanged between the respective parties (the buyer(s) and seller(s). At this point a binding contract comes into existence meaning neither party may withdraw without incurring liability. On exchange both parties will agree a completion date which is usually about two weeks after exchange. This is the date on which you will move house. If you are at all confused as to the legal terminology used your solicitor should be more than happy to explain things to you in plain English. Understand your obligations You can usually withdraw from a transaction at any time before contracts are exchanged with no liability or obligation to pay any fees towards other side s costs. Your solicitor will be able to talk you through your obligations as a buyer or seller in more detail.

5 Check the timescale of the transaction at the start It is important that you check with your solicitor the likely timescale of the transaction. On average it will take a minimum of six weeks from agreeing a sale to moving in. This period can be reduced or lengthened depending on the chain and the complexity of the move. Your solicitor should provide you with regular updates and keep you informed as to any delays. You should never organise a removal van until you have been advised of a definite date for Completion by your solicitor. 5

6 Top tips for sellers Instruct a solicitor before you find a buyer for your property When selling a property some people decide to instruct a solicitor only after they have found a buyer and have agreed a price. However by instructing a solicitor from the very beginning the solicitor is often able to obtain all the background information and necessary paperwork on the proposed transaction before a price is agreed. Helping to avoid any unnecessary delays (which can prove fatal to a house sale) this will ensure that all the papers are ready to be forwarded to the buyer s solicitors as soon as a buyer is found. Be honest with the buyer (and their solicitor) If you are asked any questions by the buyer (or their solicitor) about your property you must answer these honestly. For example, you will be asked to fill in a Property Information Form which asks for details such as which boundaries you maintain on the property, whether you have had any disputes with your neighbours etc. Even if your answers make the property look worse to the buyer you must still provide this information. Failure to do so may jeopardise the sale later on and you could be liable to the buyer for withholding or providing false information. Ask about Capital Gains Tax You do not normally have to pay Capital Gains Tax on the sale of private residences. However if you are selling a property in which you do not live, such as a second home, then you may have to pay Capital Gains Tax. Your solicitor will be able to advise you on this.

7 Know when you have to move out Contracts usually state that you must vacate your property on the day of Completion. This means that you must have moved out, normally by 1 or 2pm on that day. However it is not uncommon to agree an earlier or later time if required. As well as physically vacating the property you need to remove all your possessions and make sure that the property is left clean and tidy. Make sure you are covered When a property is empty it is often wrongly assumed that as long as the building insurance policy is maintained then it will cover all the usual circumstances. It is quite normal however that certain risks will be excluded after a property has been left empty for more than 30 days. For example, burst pipes and vandalism are commonly excluded on insurance policies. It is important therefore that you make sure any such risks are covered on your policy in the event of the property being left empty. Arrange an EPC You must provide an Energy Performance Certificate (EFC) to your buyer. Once obtained an EPC lasts for 10 years. 7

8 Top tips for buyers When buying a property, view it more than once Before submitting an offer on a property it is important to consider whether or not the property is right for you. Points to consider include: View the property at different times during the day. For example you may wish to establish whether the road is busy at certain times or make sure there is suitable street parking in the evening. Check which way the property is facing. This is important if specifically want the sun to be on the back of the house in the afternoon for example. Are the boundaries clearly defined? When you view a property you should pay particular attention to the boundaries to ensure that they are clearly defined. We would recommend comparing the actual boundaries to the boundary plan provided by your solicitor. This will avoid any potential boundary disputes in the future. Consider the right time when making an offer If you are in a property chain, while there is nothing to stop you making an offer before you have received an offer on your current home, some sellers will consider your offer more seriously if you have a buyer for your property who is able to proceed with the purchase immediately. This advice does not of course apply to first time buyers or other buyers not in a chain.

9 Negotiate what s included in any purchase When making an offer you should consider whether there are any fixtures and fittings that you would like to stay at the property. As part of the negotiation process you may wish to make an offer based on certain items (e.g. carpets, and curtains) being included. Instruct a survey The purchase of a property is probably the largest financial transaction of your life and it is important that proper professional advice is obtained from a surveyor regarding the condition of the property. There are two common mistakes regarding surveys. Firstly, people who do not need a mortgage assume a survey is not needed. Secondly, if a mortgage is needed they opt for the cheapest option available. A basic valuation survey is purely for the lender s needs and does not normally contain any details whatsoever about the condition of the property. It is important that at the very least you have a Homebuyer s Report. This is a survey commissioned directly by you with a surveyor which stipulates a contractual relationship. This relationship ensures that the surveyor is under obligation to provide advice regarding the condition of the property. Any advice given is backed by professional indemnity insurance which means that you are covered in case any problems are overlooked. 9

10 Resolve any structural defects before you move in It is not uncommon for a Homebuyer s Report or structural survey to reveal defects, particularly with older properties. When this happens you should speak with the surveyor regarding these and obtain quotations to remedy the defects. If in your opinion the cost of the work is substantial you may wish to consider renegotiating the purchase price with the seller. Consider your offer You do not have to offer the asking price when buying a property. It is quite common to initially make an offer below the asking price with a view to negotiating a lower price than the seller is requesting. Consider revising your offer Until contracts are exchanged further negotiations on the purchase price can always take place. As highlighted above, such negotiations may be sensible if your survey reveals defects in the property.

11 Know when you can move in Normally you will only have access to the property on the completion date. Contracts usually state that the seller must vacate the property on the day of completion, usually by 1 or 2pm. However it is not uncommon to agree an earlier or later time if required. As well as physically vacating the property the seller must remove all their possessions and make sure that the property is left clean and tidy. Understand the deposit required Normally, if you are selling one property and buying another the deposit which is received from your sale can be used as a deposit on your new property. This means that you should not need to pay any additional money on exchange of contracts. Furthermore, while the contract may state that a 10% deposit needs to be paid it is common for a lesser deposit to be accepted. 11

12 Understand your rights with regard to renting your property If you have a mortgage then you cannot normally rent a property without the permission of the lender. They will normally only consent to this if a proper tenancy agreement is entered into which adheres to their requirements. Notify the service providers Before/shortly-after moving into a property it is important to establish who the service providers are. In addition you should also ensure that all service meters are read on the date you move into the property. This will help ensure that future bills are accurate and any disputes are avoided. A common mistake is to assume that the Council Tax for the property will remain the same. It is possible that if there have been extensions to the property since its last valuation your Council Tax could be revalued following completion. This may result in a higher bill.

13 Tell your solicitor if you plan to extend the property It is often assumed that only planning permission and building regulation approval are required for any proposed extensions. However if any building work is within a certain distance of the boundaries of your property you will need to comply with the Party Walls Act and serve the appropriate notices on your neighbour. Furthermore if you are planning improvements you should check to make sure there are no restrictive covenants affecting your property. This may prevent the planned work being undertaken or may require you to obtain additional consents. Your solicitor will be able to advise you on the possible issues. Know your rights when buying with others A joint tenancy is where the property is owned by joint owners with none of them having a separate and distinct share. If one owner dies the property automatically passes in whole to the surviving owners regardless of the terms of the deceased s Will. A tenancy in common however is where each owner has a separate and distinct share of the property. This form of ownership may be appropriate if you have contributed to the purchase price in unequal shares. If one owner dies his/her share is not automatically transferred to the survivor(s) but will pass according to the provisions of their Will (where a Will exists). Contact your solicitor for advice on the best option for your particular circumstances. 13

14 Take independent financial advice regarding the purchase It is always advisable to take advice from an independent financial advisor (IFA). They will be able to advise you on the most suitable way to finance your purchase. They can also advise you on the most suitable and competitive mortgage products out there. A true independent financial advisor will survey the whole market to find the mortgage or financial product which is right for you. Take independent advice on building and contents insurance Your mortgage lender may try to sell you various products with your mortgage such as buildings and contents insurance. You do not have to take these products and you are within your rights to take independent advice on insurance and shop around for the most competitive deals. Think about what would happen if you lost your job It is always worthwhile considering what would happen if you were made redundant or lost your job. There are various products available to cover you in the event that you are out of work and unable to pay your mortgage.

15 Consider what would happen if your partner/spouse died Nobody likes to think about losing a partner, but when buying a house it is always worth considering the worst case scenario. You may wish to consider taking out a life insurance policy which would pay off your mortgage if one of you dies. Take advice from an independent advisor on the best policy to suit your needs. Linder Myers cannot provide you with any financial advice. Make a Will (or update your existing one) We recommend that all of our clients have a Will which enables them to control the disposal of their assets upon their death and ensure that their wishes are complied with. A Will may also assist with tax inheritance planning. Our specialist Trusts & Estates department will be able to advise you on this if required. 15

16 Why Linder Myers? With a team of specialist lawyers familiar with every stage of buying and selling a property, at Linder Myers we have a wealth of experience in helping you move home. Our dedicated team is committed to guiding you through the buying/selling process, making your move as painless and as quick as possible. At Linder Myers We don t have call centres and your matter will be dealt with by one, named person throughout. We will keep you informed and respond quickly. You do not have to visit our offices (unless of course you want to). If you prefer, all matters can be dealt with by post, , telephone and fax. We adopt a very proactive approach to your transaction to ensure we are efficient and cost-effective at all times. We offer a transparent and competitive approach to costs, making all costs and disbursements clear at the beginning of your transaction. We deliver a high quality service as expected by our clients. Please note that this guide has been prepared as a general overview. It is for guidance only and should not be considered a substitute for legal or financial advice.

17 About Linder Myers Linder Myers is a firm of solicitors with specialist departments in nearly all areas of law. We pride ourselves on our commitment to clients in delivering efficient, high quality legal services. Linder Myers provides specialist advice in the following areas of law: Corporate & Commercial Commercial Litigation Commercial Property Corporate Recovery Costs Management Court of Protection Disputed Wills and Probate Employment Family Medical Negligence Occupational Disease Personal Injury Residential Conveyancing Trusts and Estates enquiries@lindermyers.co.uk