Newbuild leasehold purchase

Price transparency

Due to the numerous variables on a transaction it is difficult to predict what the legal fee will be as this is calculated on a time spent basis and dependent on a number of factors involved including the level of seniority of the fee earner allocated to your matter.  However as a result of many years of experience we are usually able to deal with these matters quickly and efficiently and within budget.  It would be preferable to have a quick call with you to discuss the transaction before submitting a personalised fee indication but below is a general estimate of the fees and expenses involved on a regular straightforward newbuild purchase for the below property values.

 

Property Value Estimated fee range excluding VAT
£250,000 £1,250-£1,800
£500,000 £1,800-£2,100
£750,000 £2,100-£2,500
£1,000,000 £2,500-£2,800
£1,500,000 £2,800-£3,300

 

Disbursements (excluding VAT)

 

Disbursements are costs related to your matter that are payable to third parties such as Land Registry fees. We handle payment of the disbursements on your behalf to ensure a smoother process. Additional searches are often necessary for a newbuild to establish the routes and connections to utilities and highways.

 

Disbursement Fees
Land Registry Fees £20-£455
Local Search (dependant on which Local Authority but say) £150-£350
Chancel £20
Drainage Search £50-£100
Environmental Search £50-£100
Highways Search £50-£110
Utilities Search £50-£250
Land Registry Search £3
Bankruptcy Search £2
Bank Charges £20

 

Stamp Duty Land Tax (“SDLT”) or Land Tax

This depends on the purchase price of your property. You can calculate the amount you will need to pay by using HMRC’S website (https://www.tax.service.gove.uk/calculate-stamp-duty-land-tax/#/intro) or if the property is located in Wales by using the Welsh Revenue Authority’s website here. (https://beta.gov.wales/land-transaction-tax-calculator). We would however advise with regards to the amount of SDLT payable as this is a complicated area and many variables can affect the amount of tax payable including but not limited to the purchase price and the capacity which you are buying the Property.

What are the key stages of acquiring a leasehold newbuild?

Your solicitor is an independent professional legal adviser acting solely on your behalf and, when contemplating the purchase of your home, which is probably your major asset, it is advisable to seek preliminary advice from your solicitor before proceeding.

  1. Preliminary advice is free and readily available and will include answering your queries such as :-
    1. when considering making an offer, what factors should I take into account in order to reduce the ultimate purchase price?
    2. You may need to pay a reservation fee when an offer is made to reserve the plot. This fee is usually deducted from the final purchase price upon completion but is non-refundable if you fail to exchange contracts within the reservation period or withdraw from the sale.
    3. Ask the developer for all of the specification details relating to the build and plans.
    4. The developers offer may include incentives to choose the fittings, free parking, contribute towards some of the Stamp Duty so be sure what is included within the purchase price.
    5. Is it necessary to instruct a survey valuer or environmental auditor depending on the stage of development?
    6. What costs am I likely to be involved with? These include search fees, Stamp Duty Land Tax, Land Registry fees, surveyor’s fees and legal fees.
  2. Once your offer has been accepted by the seller we will receive all relevant details from either the seller or the seller’s estate agents to allow us to write requesting a draft contract.
  3. It is essential for us to submit all property searches but particularly a Local Authority Search as soon as possible as the result can take up to four weeks.
  4. It required, you should submit a mortgage application at the commencement of the transaction as this can also take four weeks or more before the Lenders issue you with a letter of offer.  Consider the length of the mortgage offer in line with the scheduled date for the property to be completed.  The mortgage broker should advise you in more detail.
  5. Your mortgage application should be accompanied by a cheque to cover the lender’s valuers’ fees.
  6. We will review the sale contract which is a lot more involved for a newbuild than a standard purchase.  We will need to look at various things including;
    1. whether the seller is required to build the property to a set specification, build the estate roads and make arrangements for both these and drains and sewers to be adopted by the Local Authority and retain the risk and insure until completion, the mechanism for calculating the completion date;
    2. Checking the provisions for practical completion and for inspection by the buyer and dealing with any snagging items.
  7. For a newbuild in particular we will need to check that appropriate planning permission and building regulations have been obtained and that the property has/will be constructed in accordance with these.  We will also need to check that there is a new home warranty scheme ensuring that you are protected against future structural issues.  We will also look to see that you have adequate rights of access to and from your home and clarify who will be responsible for the road and sewers.
  8. We will need to request information from the managing agents/landlords about the estate management, site information and any title issues.
  9. We will also need to review the lease in detail.  Albeit most developers will have an estate approved lease we may be able to negotiate some of the terms.  We will need to make you aware of restrictions in the lease.
  10. Once we have examined the draft contract, draft lease and the seller’s title, we will submit our enquiries to the seller’s solicitors.
  11. Upon receiving satisfactory replies to the enquiries raised as well as the Local Authority Search and other appropriate searches we can forward to you a full report.  This report examines in detail pre-contract documentation together with a full explanation of your likely responsibilities and liabilities.
  12. Providing the pre-contract documentation is in order and you have received a satisfactory  letter of offer from your lender we can submit the contract and lease to you for signature and request at the same time that you place us in funds to cover the 10% deposit monies payable upon exchange.
  13. We act for all the major building societies and banks and should receive instructions to act on their behalf at the same time as you receive your letter of offer.  This reduces your legal costs and allows us to expedite the transaction for you.
  14. If you are unable to produce the 10% deposit, we may be able to negotiate a reduction in the deposit sum but most developers ask for between 10-30% of the total price as a deposit.
  15. On exchange of contracts the mechanism to calculate the completion date has been agreed which is normally conditional upon the property being built. There is not normally a fixed completion date.
  16. Once exchange of contracts has taken place you are contractually obliged to proceed with the purchase unless there is a valid legal reason allowing withdrawal and the return of the 10% deposit monies.
  17. After exchange and prior to completion it is necessary for you to sign up mortgage documentation transfer and we forward to you a completion statement setting out your financial position to include all or any Stamp Duty Land Tax, Land Registry fees and legal fees.
  18. With a newbuild property your lender may require a final inspection of the property by their valuer.  You should also visit the property to inspect and discuss any snagging items with the seller and inform us of any.
  19. Once the property has been built and certified as practically complete the seller will trigger the mechanism for the completion date.
  20. On the day of completion it is usual for us to forward to the seller’s solicitors the balance of the purchase monies by bank transfer and these monies should be received by the seller’s solicitor before 2.00 pm.  You will not normally be given the keys to your new property until such time as the seller’s solicitors receive the monies.
  21. Keys will be left with the site office or agents and handed over to you on completion along with owner’s manuals and guarantees.
  22. After completion has taken place it is necessary for us to pay Stamp Duty Land Tax and register your interest and that of your mortgage lender at the Land Registry.  Once the transaction is registered we will send you a copy of the registers for your information.
How long will your matter take?

The process can be very quick but can take several months depending on whether the property is fully constructed or not. Most developers will require exchange of contracts within a period of 28 days from reservation of the property or us receiving the contract papers. If the plots are reserved well in advance of the property being structurally complete then the completion date could be months away.

Factors that can make your matter more complex and increase costs?

This list is not exhaustive but provides an indication of some of the issue that may arise:

  • Advice on a holding structure if you are an overseas entity buying in the UK.
  • Tax advice
  • Dealing with issues if the legal title is defective
  • Dealing with any issues arising from part of the land being unregistered
  • Where planning or building regulations have not been obtained and an indemnity policy or alternative action is needed
  • If documents requested from the client have not been provided and we are chasing for them
  • Preparation of additional documents ancillary to the main transaction
  • Unforeseen complications arising
  • Dealing with parties to the transaction who are uncooperative
  • Liaising with a firm of solicitors where you are obtaining a mortgage and the lender instructs a different firm of solicitors to act for you.
  • Drafting a declaration of trust as to how the beneficial interest in the property is to be held
  • Compliance with restrictions on the title
  • Acting where a mortgage is being used to fund the purchase and either we are acting for the lender or they are separately represented.
  • Extensive negotiation of the contract terms
  • If the property has not been constructed in accordance with the contractual terms
  • S106 agreements
  • Purchase of part
  • First time buyer purchasing under one of the Government Schemes

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