Author Topic: How to buy a house?  (Read 1320 times)

me1

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How to buy a house?
« on: July 28, 2020, 06:00:06 AM »
This is not so much a tax question as a question about a website suggestion or any info about how the house buying process works in the uk. We are from the us and have been here for about a year renting and like it and think we may want to stay.
If anyone has expat specific advice, would appreciate it. We went to look at a place today for the first time. We still own a house in the us which we would want to sell.

vand

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Re: How to buy a house?
« Reply #1 on: July 28, 2020, 06:51:53 AM »
Good to know you have taken well to our little island :)

I guess the big question in this is if you would need to sell your existing US property beforehand before you have the finances in place to buy the home you want over here?

Otherwise buying a house can be quite a simple process.  Firstly, you need to make sure you are able to afford and finance the sort of property you would like.

You can choose to work with a financial advisor or apply to lenders directly yourself and save a bit of money. IFAs can be free (they get paid by the lenders), or they can still charge you. Personally I don't mind paying a bit (we're paying ours 650 to arrange two mortgages and because of the complexity in the timing we feel this is money well spent).

Mortgages work a bit different here than to the US. We typically do not fix for 30yrs - our mortgages are based upon either a discounted or fixed rate from the lender's standard variable charge (which usually moves in line with bank of England base rate), usually over 2,3,5 or 10 years. The shorter the fixed/discount period, the steeper the discount. The rate you can get is also dependent upon what deposit you can put down. 40% gets you the cheapest rates (some stupidly low offers - eg 1.14% for 2yrs), but 25% (ie 75% LTV) also gets you very good rates.
 
You want to get to the point where you have gone through all the financial checks and the lender offers you a mortgage in principle agreement, basically saying they're willing to finance you when a sale is agreed. This also puts you in a good position with the seller and their agents, knowing that you're in a good position as a buyer - you wouldn't believe how so many buyers go house shopping without having a clue what they can afford or what they're likely to be paying to borrow a certain amount.

One a sale is agree you need to appoint someone to do your conveyancing. There's lots of advice on how to choose a conveyancer, but the estate agent can suggest one and I don't have a problem with this - it's in everyone's interest that recommend a good covenyancing solicitor who does a good job.

The conveyancer on your behalf performs a load of paperwork and due dilligence. Likewise, the seller appoints a counterparty to provide all the proof that the house actually belongs to the seller as claimed etc.

Your financial advisor at this point should also apply to the lender for the official mortgage, and once it is granted pass the details onto your solicitor to handle the funds. The lender will carry out a valuation survey of the property to make sure it's worth what they are lending against it.

Both parties work towards a point of:

Exchange Of Contracts - this is when the sale becomes legally binding. There is no going back after this, or if there is then the party instigating it is liable for all the costs incurred by the other party. There is usually an exchange of some funds (sometimes 10%) at this stage.

The last important date is Completion - this is when all the funds are moved.


This describes one house sale between a buyer and a seller.

In this country however, property sales often work in "chains" of varying length. That is to say that a person selling a home is also buying another home, so they are simultaneously a buyer and a seller at the same time, and the whole chain is dependent on each link. As you can imagine this can quickly become a nightmare as each link requires both a seller and a buyer, and if someone in the chain drops out the whole thing can fall apart unless another one is found to replace it.

I've personally never done the chain thing - always put myself in a position where I am chain-free, either acting as a buyer without a property to sell, or a seller who isn't looking to immediately buy another property.
« Last Edit: July 28, 2020, 07:11:04 AM by vand »

vand

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Re: How to buy a house?
« Reply #2 on: July 28, 2020, 07:07:47 AM »
The main costs of buying a house are something you need to be aware of.

Briefly, aside from the actual agreed sale price, the buyer will need money for:

Stamp duty - The structure of this is pretty straightfoward, and fortunately there is a stamp duty "holiday" right now until end of March 2021. If you sell your US home (or do so within 2 years) then you'll be liable for 0 up to 500k and 5% on any amount above that. If you keep your US home you'll pay 3% more in stamp duty at each band - there are plenty of calculators online.

Solicitors fees - their fees are usually between 700-1600, plus some costs they incur in performing their due dilligence, usually around 400. Total conveyancing fees between 1300-2000.

Mortgage fees - most mortgages have a product fee, but can also be bundled into the mortgage itself rather than having to be paid up front. This can typically be 500-1500 depending on the deal. Just make sure you have budgeted for it if you need to or want to pay it up front.

Fees for paying a financial advisor if you are using one.

You can opt to have an independent survey done - there are several levels of survey report which can highlight any structural issues with the property. This is more common in freehold houses and larger and older properties rather than purpose built flats. It's entirely up to you if you want this, depending on what sort of property you're buying. A full structural survey can set you back up to 1500-2000, but if it highlights any structural issues it may prove money very well spent, and you can use it to negotiate a lower sale price.

Moving fees - Joe's Removals needs to be budgeted for. Depending on how much stuff you have.


me1

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Re: How to buy a house?
« Reply #3 on: July 28, 2020, 03:44:59 PM »
Thank you so much Vand. This is exactly the type of info I was hoping for!

Dicey

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Re: How to buy a house?
« Reply #4 on: August 05, 2020, 07:35:21 AM »
You'll get more/better responses if you add location to the subject line. I know plenty about this topic in the US, but can add nothing useful about UK home buying. Help us help you and all that.

cerat0n1a

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Re: How to buy a house?
« Reply #5 on: August 05, 2020, 08:16:53 AM »
You'll get more/better responses if you add location to the subject line. I know plenty about this topic in the US, but can add nothing useful about UK home buying. Help us help you and all that.

In fairness, the thread is in the UK specific sub-forum.

Moneysavingexpert has quite a lot of resources for housebuyers here: https://www.moneysavingexpert.com/first-time-mortgage/

The law and house-buying process differs between Scotland and the rest of the UK. Vand has given you a lot of very good information, but there'll be plenty of people on here who can answer any questions you might have.

Dicey

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Re: How to buy a house?
« Reply #6 on: August 05, 2020, 09:10:01 AM »
You'll get more/better responses if you add location to the subject line. I know plenty about this topic in the US, but can add nothing useful about UK home buying. Help us help you and all that.

In fairness, the thread is in the UK specific sub-forum.

Moneysavingexpert has quite a lot of resources for housebuyers here: https://www.moneysavingexpert.com/first-time-mortgage/

The law and house-buying process differs between Scotland and the rest of the UK. Vand has given you a lot of very good information, but there'll be plenty of people on here who can answer any questions you might have.
In fairness, I found it by clicking on "Show unread posts since last visit."

Does the OP want "fairness", or lots of helpful answers to their question?

There was no criticism in my response, just a helpful suggestion :-)

cerat0n1a

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Re: How to buy a house?
« Reply #7 on: August 05, 2020, 10:41:51 AM »
There was no criticism in my response, just a helpful suggestion :-)

;-)

Kwill

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Re: How to buy a house?
« Reply #8 on: August 08, 2020, 07:00:42 AM »
Are you in England, me1? As cerat0n1a said, the process is different in Scotland than elsewhere.

I'm an American, and I bought a flat in England. I'd never bought a house in the US, but I realised all my assumptions and knowledge about home buying were from the US, whether that was tv shows or things I'd heard from my parents or friends. It's quite different here, so it's good you're asking early on.

What surprised me most was that nothing is final or binding until the last minute here. I got a mortgage in principle agreement from my lender, viewed flats, and made an offer on the one I liked best. The offer was accepted right away. So easy! Then less than 30 minutes later, the seller's agent called back and said that actually the seller had decided to take another offer instead but that she'd sell to me if I matched the other offer. I was so annoyed and upset that I didn't even consider that and started again from the beginning. Apparently that is pretty normal here. In the end I bought a different flat in the same building, and I actually like my place better than the other one. The process took over five months, though. It took so long the seller put the flat back on the market and started showing it to other people. And then at the last minute, a month before I was going to be homeless when my rental lease ended, we exchanged contracts and it was all over. I still don't completely understand the process.

Other things that are different here are leasehold / freehold distinctions and shared ownership schemes. You may see some places advertised that sound like great bargains, but it will turn out that you'd only be buying a percentage of the place (the share that you own) and then paying rent on the rest. Leasehold flats are a bit like US condominiums, but with some key differences.

TacheTastic

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Re: How to buy a house?
« Reply #9 on: August 09, 2020, 05:21:58 AM »
Vand's answers are fantastically comprehensive, but I want to add that if you want things to move forward with any sort of speed you will need to be chasing solicitors. I think they really seem to work on the basis of whoever shouts loudest gets attention. I had to email my solicitor and the seller's solicitor in a big group email to get them to talk to each other, and at that point things started happening.

Jacinle

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Re: How to buy a house?
« Reply #10 on: September 22, 2020, 09:37:38 PM »
The experience and details are very useful

When buying a house/apartment, what should I look for in a viewing for red flags? 

I have only bought a new built before

vand

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Re: How to buy a house?
« Reply #11 on: September 23, 2020, 12:19:32 AM »
I have to warn you all that the housing market is red hot right now.. how do I know?

Because in the last 3 months since lockdown ended, conveyencing solicitors have been so overwhelmed with work that all of them have increased their fees by 100-200%. When we were shopping for quotes in early July we got ours for 1k. We recommended him to our friends who have had to change solicitor in yhe last week and his fee is now 3k, and all the quotes they have obtained are similarly inflated. Supply and demand, eh?


vand

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Re: How to buy a house?
« Reply #12 on: September 23, 2020, 01:40:21 AM »
The experience and details are very useful

When buying a house/apartment, what should I look for in a viewing for red flags? 

I have only bought a new built before

Are you considering a move from HK directly to buying a house in the UK? If so can I be bold enough to suggest that you consider renting for a year first? Its very risky imo to just move from overseas and immediately buy your home.

This will allow you to get to know an area and its surrounding areas. Lots of buying red flags are much more apparent only with a bit of local knowledge

Always politely enquire with the selling agent:

how long the current owner has lived there?
their reason for selling?
what are the immediate neighbours like?
wat are the seller's plans, and do they have an upward chain to negotiate? (useful to know)


Be very clear if if its a leasehold or freehold, and the implications. Enquire precisely about the service charge + ground rent for any leasehold - these can be astronomical on some fancier complexes. Some newer builds now blur the line here, with leasehold houses quite common, and even some freeholds bequeathed to having a form of service charge attached for grounds maintenance, so don't just assume that a freehold means zero servicing costs.

If buying an older home then strongly consider getting a full structural survey done (ignore the cheaper homebuyer's report). These are well worth the money, especially if you are planning to make further structural modifications to the home like an extension then you may as well pay for it up front.

Check what council and council tax band the property falls in. These can vary drastically if you are looking at a homes in one council vs another council in the next road.

If relevant, check which school catchment area it falls in. This can be a positive/negative if you have school aged children, or irrelevant if you don't.

You can enquire about local planning permissions if there are any plans for new developments to be built in the immediate area, especially if it looks like there is land locally to do so.  The conveyancer should eventually highlight these, but it could be much further along in the process and throw a spanner in the works if it casts doubts upon the original decision.

And lastly, be aware that for stamp duty purposes, a First Time Buyer is classified as someone who has never own any property before in any country (not just the UK), and this needs to be true for both of you if you are buying jointly.  If you don't fulfill this criteria then you will either be classfied as a home mover or a 2nd home owner with the approriate rates of stamp duty applied.
« Last Edit: September 23, 2020, 01:51:58 AM by vand »

ExitViaTheCashRamp

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Re: How to buy a house?
« Reply #13 on: September 23, 2020, 05:28:39 AM »
The experience and details are very useful

When buying a house/apartment, what should I look for in a viewing for red flags? 

I have only bought a new built before

Depends on how much time you have ! There are a couple of good checks you can do before physically going there:

1) Use Google Maps and look at the previous years photos within, will give you an idea if there were cracks in the brickwork or lots of flytipping that kind of thing. A bit of repainting and tidying up can easily cover this up when you might visit.
2) Look at the local police site, they should have a crime map of the area - worth seeing if there is a lot of anti-social issues.

 Once you are there, look from the outside at the brickwork - it should be straight and not sloping gently downwards. If it is not, might be a sign that part of the house is sinking.

 When you are inside, gently tap the wall on the around the windows, should show if the plaster is crumbling behind the wall paper.

 Check the age of the boiler and the electrics.

 Check the loft/attic ideally on a rainy day, look for signs of damp/mould/actual rain entering the property..

 Examine the garden/grounds around the place, is water draining nicely or does the garden become a swamp.

 Never buy a house with any kind of lease or ongoing service charge.

 Ask about recent work done - might not comply to building regs

 Is the house on the bottom of a hill - will it survive in really heavy rain ?

 Is there a river nearby ?

 How is the parking in the evening ? (Visiting mid-working day tells you nothing)

 Stop outside on a friday night, can you hear loud parties ?

Jacinle

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Re: How to buy a house?
« Reply #14 on: September 23, 2020, 07:29:35 PM »
Thank you vand and ExitViaTheCashRamp!

Your advice is so useful!  I have logged it in my checklist

I plan to rent for a year or two and hope we can then buy.  This is also useful for a renter.

Kwill

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Re: How to buy a house?
« Reply #15 on: September 24, 2020, 02:00:46 AM »
These are all so useful that I wish I had asked before I bought. In the end I think I did as well as I could, given my budget and location, but there were problems I might have tried to avoid if I had had those checklists. I ended up next to a neighbor who everyone was afraid of and who seemed involved in bad substances, but he never tried to bother me much and then passed away after I had been here about 18 months. I didn't think it was that bad at the time, but it's become a much nicer and friendlier block of flats since then, with young families moving in and people talking more.

I also inherited a bad plumbing problem that the previous owner had been dealing with for years. She didn't disclose it beforehand, but she left a note for me to find after I picked up the keys. Dyno were able to sort it out in two visits once I finally called them.
« Last Edit: September 24, 2020, 04:10:00 AM by Kwill »

vand

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Re: How to buy a house?
« Reply #16 on: September 24, 2020, 03:27:23 AM »
Some other musings..

Zoopla & Rightmove are the 2 main property portals for the UK. They're both excellent and with a bit of effort you can glean quite a lot of information about local state of the market. 

I mainly use Zoopla, and from it you can usually (but not always) see how long a house has been on the market, what price reductions (or increases) it has already had, and sometimes the last time it sold (although you can get this information separately from the Land Registry). This is all very useful information to have.

Houses that have been on the market for a long time, especially in a popular area where other houses are selling faster, should automatically be a red flag - there's nearly always something undesirable that isn't being shown on the blurb.

EAs are a lot better than they used to be in my experience. If there's a known structural issue then the Agent must by law disclose that information, but there are still tricks they can use:

- They'll often use older pictures from when the house was last redecorated. I've been to see houses that were completely run down by their current occupants despite having pristine perfect pictures in the ad.

- If its a leasehold then ask if there are any upcoming major works due. In worse case scenarios the freeholder might be planning to completely redo the roof or something which could put you on the hook for a very large bill. This has happened to friends before who have been lumped with an unexpected 15k roof bill. Be very careful of older ex-council properties in particular: https://www.theguardian.com/money/2020/feb/08/leaseholders-facing-staggering-bills-for-ex-council-flats

Jacinle

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Re: How to buy a house?
« Reply #17 on: September 25, 2020, 04:11:42 AM »
Some other musings..

Zoopla & Rightmove are the 2 main property portals for the UK. They're both excellent and with a bit of effort you can glean quite a lot of information about local state of the market. 

I mainly use Zoopla, and from it you can usually (but not always) see how long a house has been on the market, what price reductions (or increases) it has already had, and sometimes the last time it sold (although you can get this information separately from the Land Registry). This is all very useful information to have.

Houses that have been on the market for a long time, especially in a popular area where other houses are selling faster, should automatically be a red flag - there's nearly always something undesirable that isn't being shown on the blurb.

EAs are a lot better than they used to be in my experience. If there's a known structural issue then the Agent must by law disclose that information, but there are still tricks they can use:

- They'll often use older pictures from when the house was last redecorated. I've been to see houses that were completely run down by their current occupants despite having pristine perfect pictures in the ad.

- If its a leasehold then ask if there are any upcoming major works due. In worse case scenarios the freeholder might be planning to completely redo the roof or something which could put you on the hook for a very large bill. This has happened to friends before who have been lumped with an unexpected 15k roof bill. Be very careful of older ex-council properties in particular: https://www.theguardian.com/money/2020/feb/08/leaseholders-facing-staggering-bills-for-ex-council-flats

Coming from where heater is non-existent, it is pretty amazing to see the costs of that equal almost an annual near median salary!!!

If I buy a flat, is it better off to buy share of freehold and separate heater system?

Jacinle

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Re: How to buy a house?
« Reply #18 on: September 25, 2020, 04:14:15 AM »
These are all so useful that I wish I had asked before I bought. In the end I think I did as well as I could, given my budget and location, but there were problems I might have tried to avoid if I had had those checklists. I ended up next to a neighbor who everyone was afraid of and who seemed involved in bad substances, but he never tried to bother me much and then passed away after I had been here about 18 months. I didn't think it was that bad at the time, but it's become a much nicer and friendlier block of flats since then, with young families moving in and people talking more.

I also inherited a bad plumbing problem that the previous owner had been dealing with for years. She didn't disclose it beforehand, but she left a note for me to find after I picked up the keys. Dyno were able to sort it out in two visits once I finally called them.

The neighbors !!  I guess that is difficult to find out, unless you visit very often and run into them?

Do people knock on the doors of the neighbors before renting or buying to find out?

Manchester

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Re: How to buy a house?
« Reply #19 on: September 25, 2020, 04:50:38 AM »
These are all so useful that I wish I had asked before I bought. In the end I think I did as well as I could, given my budget and location, but there were problems I might have tried to avoid if I had had those checklists. I ended up next to a neighbor who everyone was afraid of and who seemed involved in bad substances, but he never tried to bother me much and then passed away after I had been here about 18 months. I didn't think it was that bad at the time, but it's become a much nicer and friendlier block of flats since then, with young families moving in and people talking more.

I also inherited a bad plumbing problem that the previous owner had been dealing with for years. She didn't disclose it beforehand, but she left a note for me to find after I picked up the keys. Dyno were able to sort it out in two visits once I finally called them.

The neighbors !!  I guess that is difficult to find out, unless you visit very often and run into them?

Do people knock on the doors of the neighbors before renting or buying to find out?

I think it would be quite rude/abrupt to knock on a neighbours house to 'sound them out', even if you attempted to disguise it.  They'd know what you're doing and probably think you're a bit of a weirdo lol.

I know it's incredibly stereotypical to judge people based on these things.  But when I was househunting I was told to look out for certain red flags in the neighbourhood. If you see the neighbours have:

- kids bikes/toys left out
- caravans
- un-kept gardens
- certain types of cars
- drawn curtains in the middle of the day

You might want to investigate a bit more thoroughly.  I know as mustachians we shouldn't be focussed on materialistic things like cars.  But you can usually tell between someone who takes pride in where they live and someone who doesn't.  If someone doesn't have any respect for their own dwelling, they're unlikely to have any respect for you as a neighbour.





Kwill

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Re: How to buy a house?
« Reply #20 on: September 25, 2020, 06:35:18 AM »
My new neighbours knocked on my door, introduced themselves, and asked me questions before they committed to the place. They mentioned that they had heard some negative things about the area and asked if I had ever felt unsafe or if there was anyone who was a problem. I told them that some of that had been true but that the main issue had been with the person who had been living in the empty flat they would be moving into. For me, I was relieved to meet them and to see that they wanted to be in a quiet place with nothing bad or strange going on because I do, too. They were reassured to hear that the problems they'd heard about were in the past. We haven't become best friends or started hanging out together or anything, but we wave or say hello when we see each other.

If that had happened a lot of times with everyone who came to view the flat, I would have been annoyed, but it was just the one couple who came over to talk to me. I rather wish I'd thought to do the same once I was ready to put in the offer on the place, except that then I probably would have been scared off, which would be too bad since I've been happy here overall.

sea_saw

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Re: How to buy a house?
« Reply #21 on: September 25, 2020, 06:37:53 AM »
Manchester, this makes me smile a bit because my street is super friendly, helpful, and (by my standards), affluent. But if I look out of my window I can see bikes in front of nearly every house (it's a biking city!), and drawn curtains are pretty standard. The pavement comes right up to the front of the houses so you make constant uncomfortable eye contact with every passer-by otherwise.

The house directly opposite me which has both of these supposed red flags waving right this second is also right this second getting about 50k+ worth of extensions and reworks lol. The car next to the skip is very shiny.

Every neighbourhood is different but yes I do think in person you can get a decent sense of its vibe even without speaking to anyone.

ExitViaTheCashRamp

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Re: How to buy a house?
« Reply #22 on: September 26, 2020, 02:33:42 AM »
This house/flat is being sold via a 'Modern Auction' = RUN AWAY !!

 Huge fees are payable even if you don't end up buying it as the foundations are failing and the property is about to sink into the earth forever.

TacheTastic

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Re: How to buy a house?
« Reply #23 on: September 26, 2020, 09:38:46 AM »
I know it's incredibly stereotypical to judge people based on these things.  But when I was househunting I was told to look out for certain red flags in the neighbourhood. If you see the neighbours have:

- kids bikes/toys left out
- caravans
- un-kept gardens
- certain types of cars
- drawn curtains in the middle of the day

You might want to investigate a bit more thoroughly.  I know as mustachians we shouldn't be focussed on materialistic things like cars.  But you can usually tell between someone who takes pride in where they live and someone who doesn't.  If someone doesn't have any respect for their own dwelling, they're unlikely to have any respect for you as a neighbour.

Oh man, I probably have all these red flags at times!

I keep my curtains shut in the summer to keep the house cool, and when I am on night shifts.
My garden gets a bit weedy at times. I put down gravel in the end because I hated mowing so much.
I used to have a 23 year old car. My shiny new upgrade is only 16 now.
I don't have a caravan, but there are some bits outside that I haven't been organised enough to take to the tip now that you have to book a slot a week in advance.

Manchester

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Re: How to buy a house?
« Reply #24 on: September 29, 2020, 04:08:11 AM »
@TacheTastic & @sea_saw

It's safe to say I won't be moving in near you guys any time soon! :')

Joking aside, these were just things I was told to look out for by the 'experts' (people who have previously bought a house in the past couple of decades).