Buying Real Estate in the UK
Before the economic downturn I moved to the UK, excited to; watch football in dark pubs drinking ale while it rains outside, explore the famed English countryside in my newly purchased wellies (for all those who need a definition of wellies – rubber boots, most convenient in the UK particularly if tromping around the countryside on a rainy walk, another definition could be – green plastic knee high boots worn by model Kate Moss at Glastonbury) ride the Tube, and last but not least own my very own flat. Everything went pretty well on my list with the exception of buying a flat, which went a little more dramatically than planned.
I started the search before I even moved to England by looking online. I bought a 2 bedroom flat above a wine bar. (Remember that some lenders can have issue with properties above commercial facilities so this can make it hard to resell even if your lender is fine with it) I bought a fixer upper flat. It needed a new bathroom, kitchen, and had no heat, a blue and green striped room and really old carpet. But it was a bargain price, so I made an offer. It was accepted and we began the long process to reach the culmination of exchanging contracts and getting the keys. Oddly enough it should have been a fast process. The seller had found a place to move to and was ready to go, if the dates were too close and they couldn’t get in to their new place in time they planned to stay with relatives instead of making me wait. I was a cash buyer so no worries about a mortgage. Yet it took 6 months, all due to solicitors and the freeholder. So I have decided that perhaps a little guidance when buying in the UK would have been helpful.
Buying a house in England is not as easy as it should be, of course that is purely my opinion, others may love the daily excitement of calling to harass the solicitors to see if there is any news on the final contracts or the suspense if you happen to be in a “home-chain” and you never know if today is the day when everyone has finally successfully coordinated all their banks, solicitors, and movers and you’ll be moving tomorrow! While occasionally things like this might happen in the states the average buyer sets either a 30, 60, or 90 day escrow period (period when surveys are done and final paperwork drawn up) and as soon as you have an accepted offer you can start planning the move in date. But little did I know and foolishly I thought, as an American home owner, that the process would be similar, I realized that some rules might be different but I really thought that purchasing a home would not be a trial. As it turns out it is one of the biggest headaches ever.
Searching for the perfect home seems easiest online (Rightmove.com). Unlike the US with the central listing on the MLS, each agency only has a list of the homes they are selling in that borough so if you are not a fan of using the net to narrow down your choices, the next best thing is to go to the main street of the area where you want to live and register at all the estate agencies. They will then go through all their listings in the area and present you with everything they think fits your criteria.
A few things can make a big difference when buying property. Every buyer has his/her own list of requirements but before even visiting the property you should find out if the property is a leasehold or freehold. Never buy leasehold if you can avoid it, always buy freehold or a share of the freehold. Similar to buying a condominium with a strata or an association in the States, a leasehold is a property that you pay to occupy for a fixed amount of time (usually 100 years), which means after that fixed amount of time you must pay for a renewal of that time or the property is forfeited to the freeholder. A freeholder owns the land that a block of flats is built upon and usually owns the building, with the individual owners owning the interior of the flats while the freeholder owns the exterior and common areas. Now of course there are laws saying that you must have the opportunity to negotiate renewing your lease and services like LEASE and the LVT (LEASE is a free service that supplies legal advice through volunteer solicitors and mediators and can help to settle the price to something reasonable or at least offer sound advice), but renewing a lease can still be expensive as freeholders often charge thousands for a renewal plus solicitors fees. Keep in mind if you want to resell the property, no one wants to buy a property with a lease under 60 years as no one wants to have to pay for a renewal themselves.
If you are set on buying a leasehold, then it is essential to know the maintenance fees, insurance fees, ground rent and how many years are left on the lease. In addition check out the management company who works for the freeholder (these companies are in charge of charging and collecting the fees and working on repairs) find out its reputation and whether they follow through with maintenance. Be careful of falling in love with a flat that is leasehold especially if it has a bad management company – they can make it harder for you to buy, harder for you to sell someday in the future, harder for you to make any improvements if you decide to (as they must approve almost all changes), and in general, ruin what could be a good investment. So you owe it to yourself to pass and move on to something that you can call your home without the hassle of a stressful organization attached. Laws are not strong in defending the leasehold or at least not for smallish claims which are not worth the money of a lawyer or to take to court which the freeholder will know that you are trapped… either to pay him or take your time and possibly more money to fight him.
Try to avoid homes in a chain. A chain is a long line of people who are selling a house and in turn have found a new house, but not everyone in the line has a person to buy their home so they are waiting on finding buyers for their homes, and I have heard stories of people waiting years to get into their new home!
Keep in mind if the building is “listed” you may have to go through a long line of people and approvals to make any changes as being “listed” means that it is a building with historical value and conserving the original architecture is important.
Once you have found your perfect home make sure you met your conveyance lawyer, do not go for an in house lawyer at your estate agency. Many of the supposed in house lawyers are not even in the same town – so you never get to see them, only talk over the phone which can be frustrating if there are any issues to discuss and everything has to be done by mail which can make the process take longer.
When you have an accepted offer it is time to have a survey conducted. Make sure the survey covers all the bases, especially damp as this can be a costly thing to repair not to mention the health risks.
During the time when you are waiting for all the details to be finalized never be afraid to call and check on the status. In my case, at first I never called, instead I waited for someone to call me and tell me it was all ready. When weeks went by without hearing anything I started calling every day and magically things began to move forward. Never rely on anyone who says they are going to call you back, you should always call them back. It never hurts to call just to remind them of what you need and when you need it by. I found many times they had questions or for some reason some bit of information had been lost and instead of just calling me they were going to write me a letter asking for the information. I also found that insisting that they either fax or email instead of mail if documents needed to be shared with the seller’s lawyer or myself sped up the process immensely. Enlisting your estate agent to help with speeding up correspondence and checking on the status of contracts can be helpful and free to the buyer.
Overall I found that if you are a proactive buyer the process moves more smoothly and easily. Of course there is a lot more to buying a home that what I have mentioned especially in recent times when it comes to economics but I hope that a few of these tips will help you when searching for a new home in the UK.