The process of buying a property in Scotland is unique to the country, and those familiar with the systems in England will certainly notice a difference in the way properties in Scotland are both marketed and legally transacted.
Garrington are at hand to help you with every step of the process, but here is a basic guide for any buyer who is looking to familiarise themselves with the journey.
Budgeting and Arranging Finance
Before embarking on a property search, it is crucial to know exactly how much you can spend. This may sound obvious, but there are several costs to consider which buyers sometimes fail to include in their total budget and can lead to complications further down the line. Solicitors fees, property finder’s fees, mortgage brokers and lenders fees, accountancy fees, furnishing and removal costs should all be taken into account, but perhaps most importantly the amount of tax you are required to pay the government.
Scotland has its own laws governing ownership of land and property, one of which is Land and Building Transaction Tax (LBTT), Scotland’s equivalent to Stamp Duty Land Tax which is applicable in the rest of the UK. Please see below the current thresholds which are calculated cumulatively on a sliding scale:
|Purchase price||LBTT rate|
|Up to £145,000||0%|
|Above £145,000 to £250,000||2%|
|Above £250,000 to £325,000||5%|
|Above £325,000 to £750,000||10%|
If you require a mortgage to purchase a property, it is helpful to acquire an ‘agreement in principle’ from your lender. This document will outline how much, in theory, a bank is willing to lend you and will help exponentially when you are submitting an offer on a property.
Property Marketing in Scotland
In Scotland properties are also predominantly marketed with the sellers asking for ‘offers over’ a certain price, sometimes a property is advertised at a fixed price, usually in a bid for a fast agreement. In turn the seller is required to instruct a surveyor to publish a home report, with a valuation of the property and its condition, along with a property questionnaire and Energy Performance Certificate before marketing can take place.
Often the ‘offers over’ value is less than that specified in the home report which can be confusing for those new to the system. Estate agents often use this as a tool to try and attract more buyers for their client. How much a buyer will actually have to pay will depend very much on how busy the market is at that particular time and how much competition there is from other potential buyers.
Garrington Property Finders offer expert advice on this which can make all the difference when trying to secure a property.
With an understanding of the property marketing process, it is important to bear your budget in mind when arranging to view properties, as the price advertised could be considerably lower than the price the seller is hoping for.
When getting out and about to view properties, it is commonplace in Scotland for the owner to show prospective buyers around their home without the estate agent being present. This can sometimes feel a little uncomfortable, working with a property finder who will be present on viewings and at hand to get your questions answered can take away the potential awkwardness.
Making an Offer
Once you have seen a property you are interested in, you must notify your solicitor or property finder who will submit a ‘note of interest’ to the seller’s solicitor and will then provide a formal offer at an agreed ‘closing date’. This is not always the case if the property has no other interested parties.
If your offer is agreeable to the seller their solicitor will then formally accept the offer in writing to your solicitor. Whilst the seller’s home report will give you an overview of the condition of a property, you may wish to instruct some additional surveys at this stage. Again, Garrington can help advise you on all aspects including which additional surveys are worth investing in.
The Legal Process
The solicitors then exchange letters, known as ‘missives’, clarifying the details and conditions of the offer and acceptance. The solicitor will also check if there are any ‘title burdens’ on the property. Once these details are agreed, the ‘missives are concluded’ and both parties have a binding contract. You will not be required to sign anything, but your solicitor will need your agreement.
Until missives are concluded either the buyer or the seller can withdraw without penalty, but if either party cannot then fulfil the obligations set out in the missives, they may be liable to pay thousands of pounds in damages. Likewise, neither party can legally be ‘gazumped’ or ‘gazundered’ at this stage.
Gazumping is generally very rare in Scotland even before conclusion of the missives which can make the experience less concerning for buyers than in the rest of the UK, where gazumping can be commonplace. This is namely because in Scotland many estate agents are also solicitors who are governed by Law Society rules which do not tolerate gazumping.
It is worth also noting that there are virtually no leasehold properties in Scotland. This can be a huge benefit to buyers as they are not required to extend short leases at a cost and the complications of ‘marriage value’ don’t play a part as they can do in the rest of the UK.
In the final stages of the process, your solicitor will prepare a ‘disposition’, which involves transferring the title deeds of the property into your name. At this stage, if you have arranged a mortgage, your lender will require you to sign a standard security document which gives them various rights over the property.
Date of Entry
It is a legal requirement for a date of entry, known as the completion date in England, to be agreed at the conclusion of the missives. This is the date when your funds are transferred to the seller via their solicitor, and keys can be collected for your new property.