Having an offer accepted on your first home is a huge milestone in your life, however, it is only the first step in the process of purchasing a property. With this in mind, it is a good idea to be aware of the steps that go into purchasing a property.
- Secure Funding and Calculate Costs
It is crucial that you will have access to the necessary funds before you complete on your purchase.
If you require mortgage finance, once your offer on the property has been accepted you will need to complete a mortgage application. This can be done by your mortgage broker if you have one.
Typically, you will be required to fund the deposit of the purchase yourself, which will traditionally be 10%. It is therefore, a good idea to make all the necessary arrangements to make sure that you will have access to the required funds. This could include withdrawing funds from investments or preparing to close accounts like a Help to Buy ISA or a Lifetime ISA.
It is also necessary to be aware of what you will be required to pay during this process and budget accordingly. The costs go beyond just the purchase price as you will be required to pay Stamp Duty Land Tax (if eligible), solicitors fees, disbursements (searches, money laundering checks etc), potentially a property survey and general moving costs.
- Instructing a Solicitor
Once you have an offer accepted and are confident that you will have the funds to purchase the property, you will need to instruct a solicitor or licenced conveyancer to act for you on this purchase. It is crucial that you instruct a firm that have a strong reputation and are trustworthy. It is understandably tempting to go for the cheapest option, but this does not always result in the highest quality of service.
- Obtaining a Property Survey
Once you have instructed a solicitor or conveyancer and received your mortgage offer, the opportunity to obtain a survey arises.
It is not necessary to obtain a survey, however, by using a trusted surveyor, you will obtain a much greater picture of what you will be purchasing. You will have any faults or potential issues to do with the property’s structure raised to your attention and give you an idea of what work will need to be done to the property.
- Raising Enquires and Carry Out Legal Searches
As soon as you instruct a solicitor or conveyancer to act on your behalf for the purchase, they will begin the conveyancing process. During this process they will be generating an understanding of how the property looks legally. This will include:
- Reviewing documentation like conveyances and the property information form completed by the seller.
- Raising enquires with the seller’s solicitor regarding any potential issues.
- Conducting legal searches. This will include the local authority search which will detail the proposed works that have been carried out on the property and any future works that may take place in the vicinity of your property.
- Arranging the exchange of contract and agreeing a completion date.
- Drafting a report detailing all the legal aspects of the property, this will raise all the rights and restrictions you will be bound by to your attention.
- Exchange
Once your solicitor or conveyancer has received satisfactory responses to their enquires and have completed their legal searches, they will be in a position to exchange contracts.
This is the process when the contract to purchase the property are agreed and signed. Both solicitors or conveyancers will read out the contract over the phone to make sure they are identical, and they will sign the contract and set a legally binding completion date.
Once the exchange of contracts has taken place, you will be legally bound to complete the purchase on the agreed date. If either the seller or purchaser are unable to complete on the agreed date, there will be a breach of contract and the party in breach will be required to pay interest to the other party until the date they are able to complete. However, the failure to complete on the agreed date does not give the other party the automatic right to terminate the agreement and walk away from the transaction. If completion has not taken place, the other party can serve a ‘notice to complete’ which will establish a new completion date. Failure to complete on this date will result in either party having the right to terminate the transaction.
Most lenders will require you to arrange for building insurance to be obtained before the exchange of contract as the property will be your responsibility once completion has taken place.
Once the exchange of contract has taken place, the completion date will be set and you will be able to make concrete arrangements with removal companies and any other services you require to move. You will be able to make these arrangements before exchanging contracts, however, any agreed completion date before exchanging contracts is not enforceable so you cannot rely on any completion date until the exchange of contracts.
- Completion
On completion day, your solicitor or conveyancer will transfer the purchase funds over to the seller’s solicitor and once these funds are received, the keys to the property will be released to the estate agent and you will be able to pick them up and move into your first home.
They will also complete the Stamp Duty Land Tax Return and pay the amount due (if any). This must be done within 14 days of completion, but it is best practice to do it as soon as possible.
- Registration
Following completion, you will own your property. However, you will not the be legal owner of the property until the registration with the Land Registry is complete. The period between completion and the registration of ownership is known as the ‘Registration Gap’. During this period the seller will remain the legal owner of the property but hold the property on trust for the purchaser until registration. This can sound daunting however, there is no need to worry. During this period, the purchaser will be the equitable owner and your interest in the property will prevail over the seller’s interest. You will deal with the property as though you were the registered owner.
Key points to be aware of
Now that the general steps of what it takes to buy your first home have been established, there are some additional points that you should be aware of before you purchase your first home:
Form of Ownership
Not all properties are under the same form of ownership. You may have heard the terms Freehold property and Leasehold property before. It is crucial that you are aware of what these terms mean and the differences between them:
- Freehold Properties
Most houses are sold as freehold properties. When you own the freehold, you will own not only the property but the land that it sits on. You will own the airspace above the property and the ground beneath the property, to an extent. You will own the airspace above the property upwards to a reasonable point, you won’t, for example be able claim that a commercial plane flying above your property is committing a trespass. A freeholder will generally have the right to enjoy everything below their property, apart from any treasure found beneath their property, as this belongs to the Crown.
- Leasehold Properties
Most flats are leasehold properties. Unlike a freehold, when you own a leasehold, you do not own the land that the property sits on or if a flat, you do not own the common areas. A leasehold owner will also not own the property indefinitely. Upon purchasing a leasehold property, you will enter into a lease agreement between you and the freeholder of the land and will set a lease term detailing how long you will own the leasehold. The term can be up to 999 years and the landlord cannot unreasonably refuse to extend this term. You will often be required to pay a ground rent to the landlord along with a service charge which is a contribution to the costs of maintaining and insuring the property. Not only this, but you will be subject to the terms of the lease and have certain restrictions on your ownership like owning pets, making alterations and subletting.
Conservation Areas
It is always worth checking to see if the property you are thinking about purchasing is within a conservation area. Properties within conservation areas do not enjoy the same level of freedom when it comes to development and alterations as owners outside a conservation area. There are tighter restrictions on the development rights you will have, and you will be under greater scrutiny when carrying our any developments.
Listed Buildings
It is also important to check to see if your property is a listed building. Historic England has an interactive map which displays all the listed buildings in the country. A building will be listed when it is of special significance historically or architecturally and therefore is worth protecting. With that in mind, when owning a listed building, you will have limited rights when it comes to alteration, especially when it comes to the physical appearance of the property. If you do wish to carry out works to a listed building you will have to apply for either planning permission or building regulations like everyone else, but you will also need to apply for listed building consent. If an owner of a listed building carries out works that are unauthorised, this will result in a criminal office. It is therefore crucial to be aware that your property is listed and the limitations that come with a listing.
Stamp Duty Land Tax
As discussed, Stamp Duty Land Tax (SDLT) is payable at the time of completion. Every purchaser of a property will be required to pay SDLT if the purchase price is above a certain threshold. First time buyers have a higher threshold and will pay less SDLT, therefore it is something a first-time buyer should most definitely take into consideration.
As of 1 April 2025, SDLT starts to apply when the purchase price exceeds £125,000 or £300,000 for a first-time buyer when purchasing a property for £500,000 or less.
You will only pay SDLT on the amount that you exceed the threshold. For example, as a first-time buyer purchasing a house for £350,000, you will only pay SDLT on the £50,000 at a rate of 5% which will require the purchaser to pay £2,500 in SDLT. If you are a first-time buyer purchasing a property for £250,000, you will pay no SDLT whatsoever.
It is crucial that you consider the amount of SDLT you will be liable to pay when calculating what you can afford to purchase. HMRC’s website provides a calculator to assess the SDLT you will pay.