The dangers of cutting corners when buying a property
Solicitor Nick Elliott talks about some of the potential pitfalls involved with buying a property and explains the value of professional advice.
The true value of seeking specialist advice when buying a property has been highlighted with a recent report in the press of the valuation of a property at £1 by the Nationwide. The property had previously been bought for £86,000 and having had £10,000 spent on renovation it is now being rented out to tenants at £550 per month. So how can it only be worth £1?
The property is certainly no wreck, but according to a property survey carried out for the Nationwide, there are problems of damp and rot and some issues with the roof. These are all common problems with older properties which can be easily rectified.
So why the valuation of £1? It seems that this price tag is a standard valuation applied by some mortgage lenders when a property is outside their criteria to secure mortgage lending on.
This should act as a timely reminder to homebuyers to take professional advice and not cut corners when buying a property, lest they be left stuck with a white elephant further down the road.
Nick Elliott, solicitor at Norrie Waite & Slater, offers tips on how to avoid unsuspectingly encountering problems when buying a property.
Get the most detailed property survey you can afford, particularly on older properties.
Surveys carried out by mortgage lenders are usually superficial and are aimed at protecting the lenders investment only, not your interests. This type of survey will only usually show up the most obvious problems with the property. A more thorough survey will provide you with more detailed information about the property you want to buy, and it may highlight any problems with the property that you should be aware of. If problems with the property are uncovered this can often work to your advantage as a buyer as you can use this information to either pull out of the purchase, renegotiate the price or insist that the sellers deal with the problems before the transaction is completed.
- Ensure that the price you are quoted by your solicitor for conveyancing includes all the necessary property searches. The searches carried out by a solicitor are aimed at ensuring that you know everything you need to about the property you are buying. As well as confirming things such as the sellers legal right to sell the property, they can also uncover things such as local planning applications, possible environmental issues arising from land usage in the immediate vicinity and whether the property may be susceptible to subsidence due to mining in the area. Some law firms may not include all the required searches in order to make their quote seem more attractive. This can seem appealing upfront, when you are trying to stretch your budget, but it can prove to be false economy if important information is not uncovered.
Temporary savings to be made of up to £2500
Buyers should also enquire as to whether they qualify for any of the available Stamp Duty Exemptions- and ensure that the solicitor acting on their behalf explores any possible exemptions.
Normally, when you buy any property valued between £125,000 and £250,000, you have to pay a Tax to the Government which is 1% of the value of the property. This is called Stamp Duty Land Tax.
At present a First Time Buyer can qualify for Stamp Duty Land Tax relief, designed to try and encourage first time buyers back into the housing market and offering a saving of up to £2500, providing the following criteria are met:
- The purchase price must not be more than £250,000
- The Buyer (or all buyers if a joint purchase) must not have previously owned an interest in the property anywhere in the world
- Completion date must take place before 25 March 2012
- The property being purchased must be their main home
A buyer should ensure that their solicitor includes any charges for obtaining this exemption in the quotation provided and does not levy a separate invoice for such work.
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