Interesting Facts About Property Law
Embarking on a journey into buying, selling, renting or leasing out a home or business is an exciting, thrilling, stressful and daunting process all at once. From becoming a first-time homeowner to a long-term landlord, there is so much to think about, from finances and mortgages to signing official documents and the legal process.
It’s no secret that everyone is talking about the housing market, particularly in our current economic climate and debates over Brexit. The facts are that home ownership is at its lowest level since the 1980s, with young people being affected most by it, having to borrow from the Bank of Mum and Dad.
Unlike other sectors, price rises within the housing market have risen at an alarming rate, and this isn’t just due to inflation either. For example, according to a 2013 study , if everyday items that we bought had increased in price at the same rate as housing has since the 1970s, a 4-pint carton of milk would now cost us £10.45!
Some say it’s because not enough land for new houses is being built on, whereas others say we should protect our farmlands, fields and natural land from becoming snatched up for new builds. But, according to a council area study published by the BBC in 2017, just 5.9% of the UK is a “built-on urban area” and 2.5% is considered green urban (children's parks, golf courses etc). That means a whopping 91.6% of farmland and natural land is currently leftover.
There are arguments for and against not enough houses being built, population increases and who is to blame, from the current government to the previous ones, but the fact stands that property law is a complicated minefield because of the fluctuation of the housing market.
In short, conveyancing (or property law) is the legal process of transferring property from one owner to another, whether it be a home, business or a piece of land. Whatever you believe, when it comes to property law and conveyancing, the facts are that it is difficult to buy a home or business, but also how complicated the process can be to the average individual. However, it’s not all doom and gloom!
As expert domestic and commercial property solicitors, we know there are buckets of interesting facts and useful information available to help those beginning their property journey. Let’s discuss a few below, and some could definitely go on to help you know your stuff for when you buy, sell or rent.
Whether you’re a young first-time buyer or you’re a homeowner already, ready to move on from your current abode, buying a new house is a mammoth adult step in life. If you have a sufficient income to get a mortgage but are struggling to save for a deposit, there are now a number of Government schemes to help you along. The schemes available are as follows:
● Help to Buy: Equity - you may have heard about 5% deposits for a property. Well, this is the scheme designed around that. Those with 5% deposits can get onto the housing market, with the government providing a loan of 20% of the property value, that doesn't have to be paid back for five years. This scheme is only available for new-build properties.
● Help to Buy: ISA - if you’re a first-time buyer, the Help to Buy ISA is designed to boost savings. The state will add 25% free cash on top of what you save, capping at £12,000 (which means a top up of £3,000 making it £15,000 total savings for a mortgage deposit).
● Lifetime ISA - whether your a first home buyer, a homeowner already or looking to save for retirement, this is a flexible ISA for many aged 18-39 years old. The state will add a 25% bonus to your savings each year until your 50 and is capped at £4,000 a year (meaning an extra £1,000 annually).
● London Help to Buy - house prices in London are extortionate and the number of renters increases year on year. For those living in London, the government loan is upped from the Help to Buy: Equity Loan scheme from 20% to 40%.
● Armed Forces Help to Buy - there’s a special Help to Buy scheme for those serving in the forces, whereby an interest-free loan is repaid over 10 years (maximum loan of £25,000) and the scheme allows you to borrow up to 50% of your salary to help with a deposits etc.
If you're a freeholder, you own the building and the land it stands on outright; you won’t have to pay ground rent and the property is yours, and you have a responsibility to it. On the other hand, leasehold means that you just have a lease from the freeholder (sometimes called the landlord) to use the home for a number of years.
A lease is the right to use a property for a set period of time. When buying or renting a home, remember to always ask about how long the lease on the property is and any extensions that may be required - the shorter the lease, the more it costs to extend.
If a property has a short lease below 80 years, it can be difficult to sell on a property or be considered for a mortgage too. The general rule is that if a property has a lease below 80 years, avoid it. Instead, try and aim for those over 90 or, at least, nothing lower than 83 years.
Getting a mortgage is a scary business. Essentially, it is a legal agreement and loan taken out with a bank or building society to buy a property, which has to be paid back over a set number of years (10, 15, 25 or more).
Mortgage calculators from sites like MovingSavingExpert and MoneyAdviceService or various banks can really help you budget and work out how much you can borrow based on your annual income.
Another interesting and useful fact regarding mortgages is that remortgaging can hugely benefit you if you’re a homeowner. Remortgaging is commonly thought to be a bad thing, whereby the household is struggling to make ends meet so they free up some equity to ease financial pressure. Simply put, it’s a transactional switch from your existing mortgage to a new one and there are actually so many benefits that can come from it:
● A better mortgage rate - we all want the best deal possible. Remortgaging may mean a better rate and can save you money each month - but beware of the exit fees.
● Your original mortgage provider won’t allow for overpayments - let’s say you’ve come into some money, whether from a pay rise, inheritance or winning a competition. You may wish to put it towards paying off your mortgage debt in one go or up your monthly repayments, but your original plan and lender may not allow for it. However, you could easily do this by switching and remortgaging, as it would take your new terms into account.
● Home improvements - home improvements can raise your property value considerably, but you’ll need some money to do this effectively and remortgaging can help with this as it releases equity. Beware that many lenders will want to see proof of what you’ll be using the money for.
● Property value has gone up - over the years, your house’s value may have risen meaning you could be eligible for lower rates on your mortgage. Do your research first, but you may find yourself in a lower loan-to-value bracket.
Property conveyancing process when buying and selling
The whole property conveyancing process, from initial sale to comfortably moving in, could take anywhere from two months up to a year (or more). This all depends on the chain, any hold-ups, problems with contracts and other contributing factors. It’s important that you have a reliable and fully qualified conveyancing solicitor to help you through this complicated process. They can help with or complete on your behalf:
● Contracts - liaising with the other party’s solicitors regarding the signing and exchange of contracts.
● Deeds - preparing statements and the transfer of deeds for completion and signatures.
● Searches and surveys - they can carry out necessary local authority searches and environmental surveys on a property, as well as being able to analyse the results.
● Mortgages - liaising with mortgage providers regarding payments and forwarding on any property deeds to them.
● Land Registry and HMRC - dealing with all relevant government departments for you including HMRC, paying Stamp Duty Land Tax and proving the transfer of ownership to the Land Registry.
● Deposits - transferring any property deposits that may need to be paid to the conveyancing solicitor of the seller.
Andrew Lee Property Lawyers - providing legal advice on property in Kent
Property law can be interesting but also a complicated and stressful process for anyone undergoing it. From buying and selling property to business and landlord disputes, it’s always a good idea to get useful facts and advice from a knowledgeable source.
If you’re in need of domestic or commercial property law advice today, consider enlisting the services of Andrew Lee Property Lawyers today. Give us a call to make an appointment or visit our website today.
