Here we outline the key stages in the purchasing process and highlight considerations for first-time buyers in Scotland.
Sort Out Your Finances
Buying a house or flat is likely to be the biggest purchase you’ll ever make and sorting out your finances is an essential part of the process. First, you need to find out how much it’s likely to cost you to buy a property, including additional costs such as professional fees and ongoing costs.
The cost of the property will of course depend on location, type of property, and the property market at the time you buy. Most people are unable to buy their home outright and will need to arrange a mortgage – a loan that is secured against the property that you are purchasing. Banks will typically Offer a mortgage for up to 90% of the property value, meaning you need to pay the other 10% or more in the form of a deposit for the property purchase. Saving for your first property deposit can take some time.
There are different types of mortgages and we would recommend getting advice from an independent financial adviser to find out what mortgage would be best for you and your financial situation. You may wish to apply for a ‘mortgage agreement in principle’, also known as a decision in principle (DIP) or agreement in principle (AIP), whereby a mortgage lender confirms that they would, in principle, be willing to lend you a certain amount. Having an AIP can make you a more attractive buyer as it shows the seller and their estate agent/solicitor, that you will be able to secure the amount of money you need to buy the property.
Other costs to consider when buying a property are Land and Buildings Transaction Tax (LBTT), insurance, professional (estate agency/legal) fees, removal costs, and ongoing running and maintenance costs.
How to Find Properties
Take time to consider and research areas that you want to live in. Local estate agents will be able to advise the best areas to match your requirements and some estate agents will allow you to sign-up for alerts about properties that match what you are looking for, as and when they come on the market. As well as areas, make a note of your property requirements – a flat or house, old or new, how many rooms, how important is the location (workplace, school, public transport), a garden, parking, local amenities? Once you start viewing properties, you’ll get a better idea of what you like or don’t like and what your requirements are.
In terms of your property search, the internet is the best place to start. Property portals such as Rightmove, Zoopla, OnTheMarket, S1homes and ESPC are websites where solicitor/estate agents and estate agents advertise their clients’ properties. You can arrange viewings, browse photos and sometimes get further information about the area and local amenities. Any estate agent can advertise properties on property websites, however, only solicitor firms can use ESPC.
Viewing a Property
Prior to viewing a property, it’s best to get details of the property including a floor plan. You should also obtain a Home Report which contains lots of useful information about the property including a Property Questionnaire, a Survey by a chartered surveyor, and the Energy Performance Certificate (EPC).
The most common way of arranging a viewing is to call the estate agent who is marketing the property. When viewing a property you can ask yourself a number of things. First, do you like the property? Second, you might have seen elements of the Home Report that concern you and you can check these out with your own eyes. Last, look out for other things that would spoil your enjoyment of the property such as a bus stop right outside the window or groups of people hanging around outside the front door.
Submitting a Note of Interest
Solicitors carry out the legal part of the property purchase so they are well placed to advise about the buying process. We recommend that you find a solicitor who is experienced in negotiating property purchases, because they can guide you through the process and hopefully secure you a better price than if you negotiated directly with the property seller or the seller’s estate agent. Naturally we would recommend ourselves for this role.
A Note of Interest is a way of your solicitor letting the seller’s solicitor/estate agent know that you might be interested in purchasing their client’s property. The intention is that the property won’t be sold in the meantime to someone else before you have had a chance to make an Offer on the property.
We would recommend that, if you are interested in any property, you submit a Note of Interest through a solicitor to give yourself the highest chance of getting an opportunity to make an Offer on the property. You do not need to submit a Note of Interest to submit an Offer. If a seller receives more than one note of interest, they will often set a Closing Date. A Closing Date is a time and date by which Offers on a property should be submitted, in writing, by any interested party’s solicitor. The potential buyers submit their Offers prior to that time and without knowing what the other parties are Offering.
Submitting an Offer
Submitting an Offer is often just the start of negotiations. Negotiations tend to focus on the price, but other things can be important such as the Date of Entry. Once your Offer has been verbally accepted, there is still quite a long way to go until you can pick up the keys. In Scotland, the contract for your purchase is concluded by the buyer and seller’s solicitors exchanging letters called ‘missives’. Once these have been concluded, there is a binding contract in place: the seller is legally obliged to sell their property to the buyer and the buyer has to pay the seller the purchase price on a certain date.
Date of Entry
Even though missives might be concluded, you still can’t pick up keys until the Date of Entry, the day on which you agreed to pay the purchase price and for the seller to hand over ownership of their house to you.
You’ll need to make sure that you are able to transfer the funds for the purchase to your solicitor’s bank account prior to the Date of Entry. If you’ve got your deposit tied-up in a bank account that has a 30 day notice period for you to be able to access the cash, you’ll need to think about that as soon as possible. Your solicitor will guide you through the process.
You’ll also need to look at the practicalities of moving home such as arranging a removal van if necessary, insurance for your new property and getting your mail redirected. Once you have moved, check the property is in working order. If, for example, the boiler packs-in the day after moving in, let your solicitor know as soon as possible so that they can get in touch with the seller’s solicitor to make a claim. Depending on the terms of the missives, there will normally be a condition stating that you have a reasonable time to check that the various parts of the property are in working order.