Buying property in the UK; Step-by-step guide.
Disclaimer: Amoka is not registered with the Financial Conduct Authority (FCA). The information provided in this article is for general informational purposes only and should not be construed as financial advice. Readers are advised to seek advice from a qualified financial advisor or relevant subject matter expert before making any financial decisions.
We have written this guide for individuals buying their first home, in addition to investors looking to make their first property investment. This can be a difficult and complex process to navigate so we thought we would try and summarise the whole process!
Areas where Amoka can support will be underlined in green!
Step 1: Budget and cost estimation
It is very crucial to be aware of the costs associated with purchasing a property in the UK. There are three primary costs to consider, in addition to the purchase price of the property. These costs vary depending on the region within the UK and the purchase price of the property. Some of the costs associated are as follows:
Stamp Duty Land tax, is the tax you pay when you purchase a residential property in the UK. The tax varies based on a number of factors such the purchase price of the property and whether the property is bought under a limited company or in your personal name. A significant factor in deciding the rate of SDLT is whether this is the first purchase of a property or a second home / investment purchase. There are certain exemptions on SDLT. Please review the SDLT calculator below to find out how much tax you would need to pay.
https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
Legal Fees, is the fee for a solicitor. The transaction of the purchase of the property is managed by solicitors in the UK. For every property, buyer and seller are responsible to hire their own solicitors and have to bear their costs. The legal feels varies from £700 - £2,000.
Surveyors Fees, is the fee for a Building Survey. This is often recommended not just for period properties such as Victorian and Edwardian buildings but even newer built options. The Surveyor will inspect the property after the conveyancing process has started and before the exchange of contracts. The purpose of the building survey is to highlight any capital works required and areas of concern that could be problematic with regard to the physical structure of the property.
We have worked with a great team of professionals covering the services above! We are happy to provide an introduction to any external professionals you might need to talk to!
Step 2: Mortgage Agreement in Principal
This step will help you understand your budget.
· For a home the amount that can be borrowed is based on a multiple of your salary, usually 4.5 times your gross salary.
· For an investment you can borrow up to 75% of the total value of the property being purchased. In addition, there will be an affordability check that usually stipulates that the rental income from the property is 125% of the mortgage payments due for the buy-to-let mortgage.
Please get in touch if you need support for a mortgage we can provide a recommendation to best-in-class mortgage advisors!
Step 3: Property Search
Searching for a Home
The next step is to search for the property that best suits your requirement. The online property search platforms like Rightmove, Zoopla or OntheMarket cover the majority of residential properties that are placed on the market. With your specific requirement and your budget determined by your deposit plus the amount you can borrow via a mortgage this can be determined. In addition, you can also attend auctions either online or in person.
At Amoka we have a dedicated buying agency service where we can work to find you the perfect home via our network contacts in the industry. Many of today’s best homes are sold prior to making it onto the market via Rightmove or Zoopla so if you know what you want it is always good to stay one step ahead!
Searching for an Investment
When searching for an investment opportunity this can be found both on the market and off-market.
When searching for an investment you will need to consider the following criteria;
Your budget: This is determined by steps 1 & 2.
Where to invest: Each region of the UK has its own advantages and disadvantages. This is perhaps the biggest decision you will need to make.
What to invest in: This is an important decision within the residential sector you can invest in conventional buy-to-lets, buy, renovate, and refinance options.
At Amoka we have travelled across the country to all the major regional cities to find the best performing investment areas. We have completed due diligence on a vast number of companies in the UK that can provide hands-off investment opportunities (where you do not have to handle the refurbishment or the sourcing of tenants).
To get started please complete our investment questionnaire linked below or give us a call.
https://www.amoka.co.uk/investment-questionare
Searching for a Development Opportunity
At Amoka, we also specialise in providing off-market development opportunities. We work closely with our network of agents and have a continuous portfolio of off market opportunity. Off-market opportunities include, residential flips, commercial to residential conversions and subdivision of houses into flats. If you are a developer and looking for your next development opportunity, please get in touch.
Step 4: Negotiation
Negotiation of the purchase price is a crucial step in the property purchase. It is important to have the latest market information and recent comparables and in some cases we can support on this!
Step 5: Conveyancing and Legal Work
Once the offer is accepted, the next step is to appoint a solicitor specialising in property conveyancing. The solicitor will handle the legal aspects of the purchase. The solicitor will be responsible for conducting property searches, review any legal documentation and handle the transfer of funds. We have a shortlist of hand-selected solicitors that we would recommend.
Step 6: Property Survey
Building survey is often recommended not just for period properties such as Victorian and Edwardian buildings but even newer built options. The Surveyor will inspect the property after the conveyancing process has started and before the exchange of contracts. The purpose of the building survey is to highlight any capital works required and areas of concern that could be problematic with regard to the physical structure of the property.
Step 7: Exchange of Contracts
Once the searches and surveys have been completed and the final price is agreed between the seller and the buyer, both the parties sign and exchange contracts which commit them legally for the sale. Typically, deposit worth 5-10% of the property value is required to pay by the buyer at this point of the transaction.
Step 8: Completion
Following the exchange, the completion date is set between the two parties and on the agreed-upon completion day (usually within 1-2 weeks of exchange), the remaining balance is transferred to the vendor via the solicitors. Once the transaction has been processed, the legal ownership of the property is transferred to the buyer and the keys are released by the estate agent for collection.
Step 9: Stamp Duty
Once the legal ownership of the property is transferred, the stamp duty needs to be paid via the buyers solicitor within 14 days of completion. As mentioned above, the Stamp Duty Land Tax (SDLT) is based on the purchase price and your circumstances.
