A Residential Conveyancing guide for buyers and sellers

Contrary to public perception, a property conveyancing transaction is not standard. Every transaction is different, whether due to legal issues with the properties involved, the number of parties in a chain of transactions, the co-operation between firms of estate agents and conveyancing solicitors or the different personalities of the buyers and sellers themselves.

1. How long does it take?

The process generally takes between 6 to 12 weeks. Leasehold properties involve more work as the lease and related leasehold aspects have to be checked thoroughly. However, the timings are often dependent on yours and the other side’s positions and requirements.

2. Conveyancing Quality Scheme (CQS) and the Conveyancing Protocol

Thackray Williams LLP is accredited to the Law Society’s Conveyancing Quality Scheme (CQS). The CQS is a recognised quality standard for SRA-regulated firms in residential conveyancing. It sets out the standards of competence, risk management and client service levels expected of accredited law firms.

Firms accredited under the CQS scheme are required to use the Law Society’s Conveyancing Protocol. Using the protocol helps to standardise the residential conveyancing process and make conveyancing more transparent and efficient.

3. What does your conveyancer actually do?

Your conveyancer has a lot of work to do, and they work extremely hard to ensure that your home move goes as seamlessly as possible. Just some of their tasks include:

• Preparing the property documents for transfer of ownership

• Asking (or answering) questions regarding legal title to the property being bought or sold

• Preparing (or checking) the Contract to ensure that it protects your position

• Arranging searches with the appropriate authorities to obtain information about the property

• Liaising with mortgage lenders to secure the purchase funds or for paying off your mortgage on a sale

• Effecting an exchange of contracts which binds all parties into the transaction

• Completing the transaction and registering the change of ownership.

4. How the Sale/Purchase Contract works

Most conveyancers will use a contract which incorporates standard terms and conditions settled by the Law Society. The current version is called the Standard Conditions of Sale (Fifth Edition) 2018 Revision.

We use them as they are certain, well understood and exist to protect both the buyers and sellers involved.

The Contract will specify the price to be paid and the date on which the sale/purchase is to complete. From exchange of contracts, the parties are legally bound to complete.

At exchange of contracts, a buyer is to pay a deposit. This is usually 10% of the purchase price.

Sometimes a deposit of less than 10% is offered by a buyer. This might be as they are selling a less expensive property and can only offer to pay a deposit equivalent to the deposit they are receiving on their sale.

The balance is then to be paid by the Buyer to the Seller on the date set for completion. The seller is to hand over the keys once the monies have been received.

5. What if someone is not ready to complete on the day set for completion?

If the standard conditions of sale are being utilised, then the contract would not simply end if one party is not ready.

Instead, the party who was not at fault could then serve a notice to the other called a Notice to Complete on the other. The defaulting party would then have a period of 10 working days in which to complete the transaction. Failing that, the party not at risk could then decide to rescind the contract, i.e. end it.

Generally speaking, it is more often the buyer of a property who is more likely to be not ready in time, for example if they have not quite got their funds together in time. For a seller, the issue might be that they are not quite able to provide ‘vacant possession‘ (see later in this guide) on the day.

The financial consequences can be severe if there is a delay especially where it is the Buyer who is in default.

Interest will become payable where there is a delay. This will usually be at a rate of 4% above the Bank of England Base rate and calculated on the balance of monies outstanding. It can run into the hundreds of pounds per day.

There could also be a risk of exposure to further damages for the breach of contract. This includes the additional costs and expenses incurred by the Seller and others in the chain by the failure to complete on time. This will include additional interest on existing mortgages and can prove very expensive. This is the case too for sellers who are in default.

If a buyer then fails to complete before the expiry of a notice to complete then the Seller will also be entitled to forfeit any deposit paid at exchange of contracts and if a deposit of less than 10% of the purchase price was agreed at exchange, the buyer is obliged to make the deposit paid up to the full 10% of the purchase price.

There remains the risk of exposure to further damages for the breach of contract. The seller could then remarket and sell the property to a third party, but if they sell for less than the original sale price agreed with the original buyer they could sue that buyer for the diminution or reduction in the sale price of the property (but only to the amount not covered by the deposit monies they have already received).

6. Accepting a Reduced Deposit

A Seller can often be asked to accept a deposit of less than 10%. It may be for a number of reasons such as they are receiving a 95% mortgage, or they are reliant on a deposit being paid by their own buyer on a related sale.

The standard contract conditions are that if a deposit of less than 10% is paid, and then there is a delay to completion, then the Buyer is to make up the balance of the 10% deposit. However, the risk would remain that it might be difficult to recover those monies so we will always seek our client’s instructions as to whether they will accept the reduced deposit at exchange of contracts.

7. Insurance from Exchange of Contracts

Provided that the Standard Conditions of Sale have been used, the Buyer of a freehold property generally becomes responsible to insure it at the point of exchange of contracts. Whilst the seller does have a continuing obligation until completion to take reasonable steps to preserve the property in its present state and condition, the seller is in fact acting no more than as a trustee on a Buyer’s behalf and is not obliged to insure the property.

If some calamity were to occur such as a fire or flood, the repair cost will almost certainly be down to the Buyer and the Buyer will still be bound to complete the purchase. It is for this reason that it is essential for a Buyer then to have buildings insurance in place from exchange of contracts, not from the date of completion.

If you are a Seller, we take the view that notwithstanding the Buyer’s obligations, you should not cancel your buildings insurance until Completion.

8. Setting an ‘Exchange Date’

One of the questions that we are often asked is whether an ‘exchange date’ has been set on a transaction. The simple answer to this question is always ‘No’ as exchange dates are never set.

When contracts are exchanged, the Completion Date, i.e. the day of moving, is written into the Contract, but when it comes to exchange, that will simply happen when both parties are ready and happy to do so.

In respect of the Completion Date, it is a question of haggling between you and any other parties in the chain.

Generally, the time between exchange and completion is 2 weeks, giving plenty of time for all the remaining legal work to be carried out and for you to make your practical removal arrangements.

9. Completion Arrangements

On completion, the purchase money is sent by the Buyer’s Conveyancers to the to the Seller’s conveyancers. Once it has arrived the Seller’s conveyancers will ring the agents to confirm the sale has completed and the keys will be released to the Buyer. This will normally be around 11.00 – 12.00 for the first property in any chain. Where there is a chain, it will be a little later as we have to wait for the sale money to arrive before we can pay for the new property.

This does vary depending upon whether I am awaiting mortgage advance money, and how busy the banking system is, and any other delays caused in the chain (if any).

On a purchase, we will ask the mortgage lender to send the funds to us by CHAPS for the working day before completion. This allows us to complete promptly on the day itself, rather than waiting for the advance to show. Lenders commonly deduct approximately £30 from the advance to cover the cost of the CHAPS. They will also charge interest from the day the advance is sent to us.

10. Reading the Meters

Technically, it is the Seller’s duty to notify the various utility companies that they are moving and to arrange for final readings to be taken, but it is sensible too for a Buyer to take meter readings for the utilities on the day you move in.

11. Capital Gains Tax

Capital gains tax applies when you sell a residential property for more than you originally paid for it. Tax is applied to properties that are not your primary residence. The taxable capital gain equals the sale proceeds minus the original purchase price and any improvements made.

You must report and pay any Capital Gains Tax due on UK residential property within 30 days of selling the property.

Please note that we are not able to provide you with any Tax advice in respect of your transaction.

12. Protocol Forms and Enquiries

When you are selling a property, your conveyancer will provide you with some standard forms for completion which will then be sent to the Buyer’s solicitors as part of the contract documentation.

These forms include:

A Fittings and Contents questionnaire

This a list of fittings, such as carpets and curtains that the seller intends to leave at the property at completion, intends to take from the property, or offers to sell to their Buyer at an additional price.

We will ask our Buying clients let us know if the form is not correct from their understanding of what items were to be included in the sale. This form will be attached to the Contract so that it is legally binding on exchange of contracts.

Property Information Form

This form is for the seller to give the prospective buyer detailed information about the property. The information contained within the form can be relied upon by a Buyer and, if information contained within the form is incorrect, could give rise to claim for compensation against the seller. It is important then that a Seller provides accurate responses to the best of their ability and updates the form during the transaction if things change.

That said, if a Seller does not know the answer to any question, they can say so.

A word about Japanese Knotweed

In the Property Information Form, a Seller is asked whether the property is affected by Japanese Knotweed.

Japanese Knotweed is a highly invasive, fast-growing weed which can grow at speeds of 10cm a day. Its aggressive growing ability can lead to costly damage to property and infrastructure.

If you are a seller and do not think that the property is affected by Japanese Knotweed, we will recommend that you still simply answer ‘not known’ to this question. If it were to transpire that the property was affected, but you had honestly not realised that that was the case then this could give rise to claim for compensation against you.

Leasehold Information Form

Where a property is Leasehold, this form is for the seller to give detailed information about the lease of the property as well as the management of the building it is within.

13. A word about Vacant Possession

When a property is sold with ‘Vacant Possession’ it means that the seller should ensure that the property is empty and ready for the buyer to move into on the completion day, unless otherwise agreed with the buyer.

As part of the process, the seller will complete a Fittings and Contents form which will detail items at the property which will be left or taken from the property at completion.

Parties can also agree other contents to be left but the property must be cleared of anything else. This includes any items in any loft or garden.

14. Enquiries

We are required by the Conveyancing Protocol to only make enquiries that arise from the title documentation and protocol forms that we receive. We are not permitted to make indiscriminate standard sets of additional enquiries nor raise enquiries seeking the seller’s opinion rather than fact. As a seller, you are not required to answer such questions.

However, it must be noted that if you, as a Buyer, wished to rely on information that the seller has provided, that information has to be provided in writing via the seller’s solicitors either in enquiries or within the Protocol Forms. If then you do receive representations on matters of importance to you, say from the estate agent or from the seller direct then you must let us know so that we can ask for the seller’s solicitors to confirm this information in writing.

15. Condition of the Property

The property is sold to a Buyer in its present condition (meaning its condition at the point of exchange of contracts) and, in general, the seller is not liable for any physical defects.

For that reason, we recommend a Buyer obtain a survey of the property. A survey should reveal the structural integrity of the property and what works may be needed in the short and long term.

A surveyor should also be able to advise what alterations have been made which may have required planning permission and building regulation consent which assists us to consider whether all appropriate consents have been obtained.

We recommend that Buyers re-visit the property when exchange of contract seems near to ensure there has been no material change in the condition of the property, e.g. broken windows.

16. A word about the boiler

In respect of services at the property, for example gas supply, the heating system, drainage and electrics, the onus is a Buyer to have those systems checked by an appropriately qualified person if they wish to do so. A Seller is under no obligation to have those tested or serviced prior to completion.

17. Energy Performance Certificates

Energy Performance Certificates are intended to inform potential buyers or tenants about the energy performance of a building, so they can consider energy efficiency as part of their decision to buy or occupy that building. They are needed then whenever the property is sold or rented (even if the property has not be marketed for sale or to rent).

The EPC certificate will provide property-specific information and guidance on potential options and costs around retrofitting for energy efficiency.

Minimum Energy Efficiency Standards require all rented properties let in England and Wales to have a minimum EPC rating of 'E'.

However, with the move towards a net zero economy, tightening of the requirements imposed around energy efficiency should be anticipated with the Government having proposed that all new tenancies, from April 2025, requiring a C rating and all rented properties having that rating from 1^st April 2028.

However, it should be noted that recent announcements from the government indicate that these standards could be subject to change or be scrapped entirely and so is subject to change.

18. Title to the Property

The majority of property in England and Wales is now registered at the Land Registry. On registration the property is given its own registered title, referenced by a title number, with that title divided into 3 registers being:

• The Property Register

The property is identified in the Property Register together with any rights that benefit the property. If the property is leasehold, brief details of the Lease are set out.

• The Proprietorship Register

The Proprietorship Register identifies the present legal owners and any restrictions that might affect the transfer of the property.

• The Charges Register

The Charges Register contains details of any restrictions, conditions or rights of others that affect the property. Details of any mortgage over the property are also listed in this register.

19. Title Plan

For each registered title, the Land Registry produce a scaled plan showing the extent of the registered title, usually shown edged in red.

20. A word about Boundaries and the General Boundaries Rule

It is a commonly held misconception that the ownership of boundaries can be ascertained from the title deeds of the property. This can sometimes be the case, especially with more recently built properties, but more often than not the deeds are silent on the subject.

It should also be noted that Land Registry plan does not usually show the definitive position of the boundaries. They work to a ‘General Boundaries Rule’. This rule means that the precise line of a boundary is undetermined by the Land Registry unless an application is made for it to be fixed.

21. The difference between Freehold and Leasehold Properties

When you buy a property freehold, you own the land, and any building on it, until you decide to sell it.

Leasehold is where you buy the property, but not the land it sits on. The land is still owned by the landowner, who is selling the property for a set period of time. It’s more common with flats, but there are leasehold houses too.

When the term of the lease expires, the property will belong to the landowner unless you can extend the lease.

22. Problem areas with Leasehold Properties

There are a number of problems that can be encountered with leasehold properties. The more common issues include:

The Length of the Lease

Lender’s requirements on the unexpired term of a lease of the property are ever changing but in general, if a lease has less than 90 years left to run, it is time to start thinking about extending the Lease, as, when the time comes for you to sell the property a shorter lease is likely to have problems with the marketability of the property.

Ground Rent

Some Leases have a fixed amount set for the annual Ground Rent, whilst other Leases might seek to vary the Ground Rent on an increasing or escalating basis over a number of years.

Escalating ground rents, such as ground rents that double every 10 years or so, are a particular cause for concern with many lenders viewing them as high risk to the extent that Lenders will not lend on them.

Whether the Ground Rent is fixed or escalating, if the Ground Rent payable exceeds £250.00 per annum (or £1,000.00 in Greater London) this creates an issue under the Housing Act 1988. Under the Act, if the Ground Rent exceeds these values, it could create an Assured Shorthold Tenancy and if the Ground Rent payments were to fall 2 or more months into arrears then there would be a mandatory ground for repossession by the Freeholder.

23. Building Safety Act 2022

The Building Safety Act (BSA) is designed to improve safety in high-rise buildings by imposing ongoing duties on those who manage tall buildings. It also deals with who should pay to remove defective cladding from tall buildings and for other repairs that are needed to remedy historic defects.

The duties relating to the ongoing management of building safety risks apply to "higher-risk buildings". Broadly speaking, a higher-risk building is a building that is at least 18 metres in height (or has at least seven storeys) and contains at least two residential units.

The provisions in the BSA about remedying historic defects apply to "relevant buildings". To be a relevant building, the building must be (among other things) at least 11 metres high or have at least five storeys.

We will rely on other parties (such as your lender or your surveyor) to determine whether the building could be either a "higher-risk building" and/or a "relevant building".

If the building appears to be a higher-risk building then the BSA requires the "accountable person" to assess and manage any building safety risks that could cause harm to people in or around the building. The accountable person might be the landlord or it could be a management company.

The costs of taking building safety measures can be charged through the service charge of certain leases, even though this is not expressly referred to in the lease.

If it appears that the building is a relevant building, it is necessary to investigate:

• Whether there are any known historic defects in the building.

• Whether any remediation works are in progress or planned and how disruptive any works would be to the property.

• Who is liable to pay for any remediation works, including whether the lease you are buying could be a "qualifying lease" which benefits from the leaseholder protections that restrict the amount that you can be required to pay towards the remediation works. To be a qualifying lease, the lease must have met certain criteria on 14 February 2022. The status of the lease as a qualifying lease (or not) may have an impact on the valuation of the property and, in some cases, on a mortgage lender's willingness to lend on the property.

When investigating the property, we have to rely on information given by the seller's conveyancer. We will not be able to verify all of the information independently and are not liable for any errors or inaccuracies in the information we receive.

24. A word about Rentcharges

Some (freehold) properties are subject to a Rentcharge. A rentcharge is an any annual or other periodic sum charged on or issuing out of land, and works by imposing a charge on the land, which can be enforced by the rent owner exercising rights against the charged land, if payment of the rent does not occur.

Since 1977 the creation of rentcharges, with certain exceptions, has been prohibited.

One of the exceptions has been the creation of “Estate Rentcharges” including for the payment of service charges towards the costs of maintenance of communal areas on a housing estate.

The difficulty with rentcharges however is the powers of enforcement available to the rentcharge owner in the case of nonpayment. Under s.125 of the Law Of Property Act 1925, this can include rights of entry and also that the rent owner may grant a lease of the charged land to trustees, who must try to raise enough to pay the rent and arrears, together with all costs and expenses caused by non-payment of the rentcharge. There is no need for any legal demand for the rent to have been made. Such leases are known as rentcharge leases. Such leases give the tenants the right to possess the property.

Recent caselaw has confirmed that once such leases are in place, they will not end once the arrears have been paid and instead homeowners would be dependent upon the tenants surrendering their interest. As a result, lenders are now unlikely to agree to lend on affected properties unless the rentcharge arrangements are varied.

25. The Searches we obtain

There are a large number of searches that we can obtain for you on a property depending on what would be appropriate given its location. For example, if the property was near to a known coal field, we may obtain a coal mining search to ascertain whether the property might be at risk of subsidence caused by mining operations.

Whilst a number of searches are location specific, we recommend obtaining the following searches on each and every property being purchased:

Local Authority Search

The search result comes in two parts.

Local Land Charges Search

The first is a search of the local land charges register which reveals any local land charges registered against the property. These might be planning charges (such as planning permissions and planning agreements), planning enforcement notices, compulsory purchase orders, tree preservation orders, and financial charges.

Local Authority Search Replies to Enquiries

The second part is a local authority search which provides replies to standard (and optional) enquiries of the Council. It looks at a range of matters such as planning permissions, building regulation consents, road adoption status, road and rail scheme, environmental notices and whether any part of the property is registered as common land or as or village green.

The Search result only relates the property searched against.

Planning Search

As the Local Authority Search only provides details of planning decisions in relation to the property, we would normally obtain for you a separate planning search which provides information on current or future developments in the local area that could influence your enjoyment and use of the property.

The Report also includes details of development plans for the area which outline the desired approach to land use and development.

Finally, there is a section on “Your Neighbourhood” which summarises information the search company has gathered about the local area to give you an overview of your neighbourhood. This includes information about the type of housing and people you might find in the vicinity and information about the key services and facilities nearby.

Drainage and Water Search

This search will tell us if the property is connected to the mains water supply and to public sewers. A plan is also provided showing the layout of public drains that the authority have records of.

Environmental Search

Where land is found to be contaminate, and the party who caused that contamination cannot be found, the current owner may be required to organise and pay for the remediation of the land. This can be extremely expensive.

We will obtain for you an environmental datasearch to establish the risk of land being contaminated. This type of search is also known as a "desktop search” meaning it does not include a site visit or testing of soil or groundwater samples.

The result will indicate whether the property is at risk from a number of environmental issues that could affect your use of the property, expose you to the risk of clean up costs or reduce the value of your home.

The search will also provide information on the risk of flooding affecting the property.

26. A word about climate change

The environmental search that we obtain includes a section on whether the property is at risk of being significantly impacted by climate change.

This risk is significantly higher with coastal property and the search will show a rating of the future climate risk for the property, for 5 years and 30 years in respect of ‘physical and transitional risks’:

Physical risk - environmental impacts that could affect the value of the asset or investment such as the site or property being acquired, e.g., from an enhanced risk of flooding, subsidence or coastal erosion due to climate change. These factors could result in inaccessibility, un-insurability and unavailability of capital investment.

Transition risk - the impacts of policy or legislation that moves economic assets away from high carbon, energy intensive activity to Net Zero emissions. This includes changes to energy performance ratings, retrofitting to meet new standards and the risk of increased awareness of climate change e.g. from property buyers. The impact of these factors tends to be financial – i.e., legislation may change requiring all property owners to bring their homes up to higher energy performance standards or buyers not agreeing to purchase a property unless and until you have done so.

If any such risks are revealed in the searches we undertake for you – we are now obliged to notify your mortgage lender of any risks identified for them to consider whether it impacts on their decision to lend. They would need to refer this to their underwriters which will result in delays and may result in them asking for further information, additional reports/searches and less likely (but certainly possible) they may refuse to lend on high risk properties. Please note that in these circumstances, we will be unable to proceed to exchange until we have written confirmation from your Lender that they are happy for us to proceed.

27. Joint Ownership

In law, property can be held by more than one person either as joint tenants or as tenants in common.

If the property is held as beneficial joint tenants, then it automatically passes to the survivor on the death of the first, whereas if it is held as tenants in common, that does not happen.

If you decide to hold the property as tenants in common, whereby you each own a share in the property which will not pass automatically to the survivor, then a Trust Deed may have to be prepared, depending upon the circumstances. The shares held do not have to be equal. For example, one party can hold a 75% interest in the property and the other party only a 25% interest.

At any stage during the joint ownership, the holding of the property can be changed from beneficial joint tenants to tenants in common, and vice versa.

Please note the manner in which the property is held may have tax implications.

28. A word about Stamp Duty Land Tax

If you’re buying a home in England or Northern Ireland you might have to pay Stamp Duty Land Tax (SDLT).

It was introduced by the Finance Act 2003 and largely replaced stamp duty which is a form of tax charged on legal instruments. SDLT is not a stamp duty, but a form of self-assessed transfer tax charged on "land transactions".

Whilst under the old regime, the level of stamp duty payable was quite easily ascertainable (the price being paid for the property being the main consideration), SDLT is much more complex and ever changing. The questions we now have to ask to ask of our clients are wide ranging and can include:

• Whether the property is solely residential;
• Whether the property contains more than one dwelling or an annex;
• Whether the property is fit for habitation;
• Whether the buyer owns another property;
• Whether the buyer’s spouse owns another property;
• Whether the buyer is a first time buyer;
• Whether the buyer is a UK resident

And the list goes on and on.

More often than not, we can establish fairly swiftly what SDLT will be payable but there may be times when we have to ask our clients to obtain specialist accountant advice on the SDLT that will be payable in particular circumstances.

29. Mortgages – Acting for Borrower and Lender

It should be noted that in most cases where our Buyer client is obtaining a mortgage, the Lender will also be our client. We are required to follow our Lender client’s requirements and can often be required to seek their instructions where an aspect of the property does not meet with those requirements. For example, we may need to seek their approval to covering a defect in the title with indemnity insurance.

It should be noted that if a Buyer client were to instruct us not to disclose something to our Lender Client that should be so disclosed then we would have to cease to act further in the transaction.

30. Defects in the Title and Indemnity Insurance

Where our investigations reveal that there is a defect of some sort with the title to the property, we may suggest that indemnity insurance be obtained.

Indemnity Insurance itself does not remedy the defect – it will only cover for loss of value or the costs of litigation. However, to remedy the defect may not be possible (and if we try to, we could lose the ability of covering the defect by insurance).

The only other options would be to proceed irrespective of the defect (which a lender would not agree to) or to withdraw from the transaction.

Where required, we will seek quotations for a suitable policy for our Buyer clients to consider.

Any such quotations will be obtained from a limited number of insurers, expert in providing insurance of this nature, and who are regulated by the Financial Conduct Authority (FCA) and authorised and regulated by the Prudential Regulation Authority. This firm is not contractually bound to any insurance provider and will receive no payment from the insurance provider in connection with any policy obtained on a Buyer’s behalf.

Please also note that we are not authorised by the Financial Conduct Authority. However, we are included on the register maintained by the Financial Conduct Authority so that we can carry on insurance distribution activity, which is broadly the advising on, selling and administration of insurance contracts. This part of our business, including arrangements for complaints or redress if something goes wrong, is regulated by the Solicitors Regulation Authority. The register can be accessed via the Financial Conduct Authority website at www.fca.org.uk/firms/financial-services-register.

If you would like any advice on purchasing or selling a property, please contact Adrian Whichcord, Head of the Sevenoaks Conveyancing team, on 01732 496496.