Fidlers Blog

There has been an incredible amount of talk in the media about the property market over the last couple of years. As usual the reporting is incredibly negative (predicting house price crashes must be classed as light relief when you spend your day speculating about swine flu, SARs and global warming disasters).

The reporting also focuses on property prices instead of volume of transactions - the two are linked but in relation to the economy the volume is generally more important. Whilst prices are important to those getting onto the property ladder for the first time they are largely irrelevant to people buying and selling (what you lose/gain on one side you gain/lose on the other). Volume of properties sold affects a lot of people though.

The apocalyptic news blitz during 2008 effectively put the brakes on the property market – reducing the number of overall transactions from previous averages of around 1.2m – 1.4m a year to around 450,000 in 2008 – less than half (one source for this is www.houseprices.uk.net).

When the media convinces everyone that prices are plummeting they freeze like rabbits in headlights and don’t do anything (try comparing the predicted 40% price falls with the actual price falls of around 16% in 2008 and price rises in 2009).

The knock-on effect of this was massive – each house move usually involves everything from electricians, to plumbers, DIY stores, decorators and furniture shops. Halve the number of transactions and you’ll dramatically hit their businesses.

I’m not saying that the media created the recession from nothing – there were fundamental problems in the mortgage market that needed to be resolved – there needed to be an adjustment. However the media did take a ‘normal’ house price correction (of the kind we saw at the end of 2004) and turn it into a panic-driven near-collapse of the market to levels we haven’t seen in over 50 years.

So if the media caused ( sorry – substantially contributed to) the reduction in volumes, what’s going to happen next? Is this it? Are we going to remain a nation where only about half a million people move a year as opposed to the 1.2-1.4 million a year for the previous decade

I don’t think so.

The first reason for this is the constant level of transactions over the years. When you look back much further than the recent past (using The office for national statistics you can check the figures all the way back to 1961) you can see that the levels of transactions in recent years aren’t some sort of hyped-up blip brought about by greedy estate agents – they are the normal sort of levels. We haven’t dipped below a million transactions since 1974, and haven’t been as low as 450,000 since before these records began. (Just to avoid breaking up the flow I’ve copied a summary of the figures onto the bottom of this article)

My second reason for saying that we’re not going to stay at these levels lies in why people actually move house in the first place – here’s a list taken from www.articlesbase.com The article is American but the issues mentioned are pretty universal. Anyway, here’s the list of reasons why people move:-

1. Home is too small
2. Downsizing
3. Aging systems and decor
4. Purchase a new build
5. New home build wasn’t as expected
6. Change in family circumstances
7. Retirement
8. Moving closer to elderly parents
9. Seniors moving to retirement homes and nursing homes
10. Health Reasons
11. Neighbourhood changes
12. Commute to work
13. Corporate transfer
14. Renovating and Flipping
15. Cashing out
16. Financial Stress
17. Difficult Neighbours

Can you see ‘house price changes’ on that list? Me neither. In fact if you look down the list, every factor mentioned involves real factors close to people’s hearts – changes to their day to day life as opposed to abstract worries set out by the media.

Are these factors going to go away?

Nope.

All of these life-changing things are continuing to occur within people’s lives. They will have caused many of them to move home already – but from the overall statistics there are a hell of a lot of people out there would have moved in the last couple of years but for some reason they haven’t (perhaps not helped by scare stories in the media). Their desire to move hasn’t gone away and sooner or later they will be coming back into the market.

So whilst the press and media speculation can cause problems (major ones this time) in the housing market, they can’t take away people’s desire to move house

What about the shortage of money – you can’t get a mortgage these days can you?

Well if you don’t bother looking for one then no you can’t. However 30 seconds on google will throw up a load of deals. The best (i.e. cheapest) deals are available to those who can put down 25%- 35%, but as an example I’ve just seen HSBC bank offering a 4.99% tracker mortgage with no arrangement fee and they will lend up to 90% of the purchase price.

Some people will say 4.99% is high but 18 months ago a rate like that would have been seen as dirt cheap by the whole market. So don’t believe the hype and actually find out yourself what you can get. You can try the search engines or an IFA (Independent Financial Adviser). I’ve had good results through one called Town and Country mortgages

Finally – so what? – I don’t work in the property industry – this is nothing to do with me

Actually it probably has. If you put half a million property transactions back into the market, the knock-on effect on all the peripheral services (I’ve listed them above – electricians, plumbers, DIY etc) is massive, and will help us to start to pull out of recession more quickly – which should be good for most people.

All we have to do then is to stop reading the papers….

Statistics – number of property transactions in millions in England and Wales – 1961 – 2002
(Source: Inland Revenue)

It used to be quite rare that we would be asked this question – people may have lost faith or confidence in their conveyancer and want to change to us part way through the transaction. Unless something serious has gone wrong the normal advice would have been to stick it out with the old conveyancer.

It’s that time of year again – season of goodwill to all men – unless of course you’re about to move house, split up from your partner, or die.

People are often surprised to learn that some of our work is seasonal – thinking that apart from major disasters it must just trickle along from month to month.

Actually many areas we deal with are very seasonal.

Conveyancing – moving house
Take conveyancing for example – it normally starts to build momentum towards the end of January, developing into a bit of a springtime boom; then it drops away in the summer when people go on holiday. September comes and we see another burst, and around this time of year Christmas itself is the huge factor. Almost every conversation we’ve had with conveyancing clients over the last month will have featured those three little words “in by Christmas”

Basically all the purchases that would have completed at the end of December or in the first 2 weeks in January will usually try and get completed by Christmas. In some ways that would be nice – in your new home in time for the festive season; in other ways it’s not so good – everything you need to live on is still in cardboard boxes – you don’t know where the tea-bags are – let alone the Christmas presents. As well as clients wanting to be in before the big day we also come under pressure from Estate Agents who want to get as many completions through as possible before their year-end. It usually means that December is a bit of a mad month for us. Hopefully by today we should have received the last of the new instructions where people want to get in by Christmas – it’s not really possible at this stage.

Matrimonial – splitting up, divorce and so on
December is not really any busier than other months in the family department (although we are very busy at the moment) – the big rush tends to come in January. It’s a sad fact that divorces always rise in the new year – people come together for Christmas and the pressure of being together for a longish period can highlight problems that were already there. As we go into the new year people often decide ‘new year, new start’ and come to see us about a divorce.

Probate – wills – generally people dying
It’s a fact of life (and death) that a cold spell usually increases the number of people dying of age-related illnesses. There seems to be another factor however – that of hanging on – it seems that the number of new probate instructions we get almost always rises in January – regardless of the weather. I can’t say why this is other than speculating that people may somehow hold on until Christmas – seeing the family one last time, and then pass on afterwards. It’s a bit of a grim thought really, but I’m afraid it does seem to be true. It’s all the more reason to make sure you make the effort at Christmas and see all your relatives.

Finally – Office Parties
We’re right in the middle of the office party season at the moment – I can’t wait for ours, which we usually have on the 23rd. If you’re after legal advice on coping with the office party then you’re probably going into it in the wrong frame of mind – it’s really not a good time to let people know how you really feel. Over the last few years there have been a number of court cases arising from incidents at office parties – it’s really not a good time to make career-changing decisions.

I’m really really looking forward to Christmas – I love the feeling of just relaxing for a week or so, and it’s nice spending time with the kids. I read something recently saying that instead of resenting the winter and dark evenings, we should embrace it instead – enjoying the darkness, and get cosy at home. I’d go along with that.

I hope you have a happy Christmas and a great new year

Cheers

Mark

When people are buying a property, one of the things they are sometimes very keen to know is ‘which is my boundary’ – they want to know which one they have to look after. Sometimes when they’re asking they’ll come out with some comment like ‘I know it’s the one on the right normally but I want to make sure’. I then have to explain that there’s not really any ‘normal’ when it comes to boundaries – it could be that you’re meant to maintain the one on the right, or the left, or all of them, or none of them.

This information becomes even more important when we get a boundary dispute – two neighbours arguing over who maintains a boundary, or where the boundary actually is.

So I thought I’d do a small blog setting out what the legal position is, and what to do if you find yourself with a dispute with your neighbours over the boundary.

Start with the Title Deeds
If you want to find out who is meant to maintain a particular boundary then the best place to start is the title deeds. There may well be a clause in one of the deeds that states that you must maintain a particular boundary. When the deeds talk about this they usually identify the boundary you need to maintain by marking it (or them) with an inwards “T” on the plan in the deeds, like on this example below.

For most people their deeds will now be registered at the Land Registry which means you can obtain a copy of them quickly and cheaply online. (You can usually also get a copy from your mortgage company but they will charge for this – more than you will pay the land registry. Also the solicitor who acted when you purchased may well have a spare copy on their file – you should be able to get this from them for free – but there may be a slight delay if they have to dig it out of their archive)

To get a copy of the title deeds go to the Land Registry. At the time of writing it will cost you £4 for a copy of the main parts of the deeds, and another £4 for a copy of the filed plan

What am I looking for?
It’s really hard to explain what’s in deeds as they do vary quite a bit – as I’m writing this I have no idea if you live in a brand new property that was registered last year, or a 400-year old property that was registered 80 years ago. However there are certain rules as to how deeds are registered so I’ll deal with those. The registered title deeds are contained in up to 3 parts:-
1. Firstly you’ve got the main part of the deeds (which contains the property register – description of the property, the proprietorship register – who owns it, and the charges register – who’s got a mortgage on it). There may be something in the charges register about the boundaries – something along the lines of “the buyer covenants to maintain the boundaries marked with an inward “T” on the attached plan”.
2. Secondly you’ve got the ‘filed plan’ – there is a filed plan for every registered property and it shows the whole property. This plan is drawn up by the Land Registry when they first register the title deeds.
3. Thirdly you may or may not have ‘other documents’ – more often than not this is a copy of the transfer deed from when the property was first sold – for example the builder selling to the first buyer. This deed is usually attached because it contains quite a few conditions (builder like to put conditions on the properties they are selling), and it’s easier for the Land registry to attach a copy to the title deeds rather than copy out the long deed and decide which bits need to be included. The bad news is that your information on boundaries is often contained within these attached deeds. I say bad news because you also have to pay the land registry for a copy of this other document. At the time of writing this will usually cost another £4.
If you have got this extra deed then look through it – it may well be pretty confusing. There will usually be some sort of plan contained within it – this plan will have been drawn up by whoever drew up the deed itself – often the original builder’s solicitors. What you’re looking for is something like “the buyer covenants to maintain the boundaries marked with an inward “T” on the attached plan”. Looking at the attached plan should hopefully show you which boundaries you are meant to maintain.

What if there’s no mention of maintaining boundaries in my deeds?
To be absolutely certain you’d need to check your neighbours deeds as well – it may not say anything in yours but your neighbours might have a clause saying they have to maintain certain boundaries that divide you and them.
If it says nothing in any of the deeds then the standard position is that the boundary should be maintained jointly by both neighbours.

I’ve found the T marks! I have the answer!
Not so fast! This is a good starting point, but we still have a way to go before being able to say you have the definite answer. It would still be wise to check your neighbours deeds as well – they might also have a T Mark – which again would imply you should maintain it jointly (or it may mean that the first person to have the condition imposed was right, and the second time it was a mistake – that’s too complex a position to discuss here, but see below where I talk about the real world).

The more likely problem is the actual location of a boundary. Say for example you want to replace a fence – but the boundary is stated to belong to your neighbour. It’s blown down and your neighbour has disappeared (no connection between the two!). If you put your new fence just a centimetre on your own land then it’s your fence as it’s entirely on your own land. You’ve effectively given up about a centimetre of land but if you actually have a life then that shouldn’t really matter (should it?). The problem comes 10 years down the line when two new people are living either side of the fence. The people on the ‘neighbour’ side can see in their deeds it’s down to them to maintain it. The people on ‘your’ side know from you that the fence has been moved and it’s on their land. Here we’ve got the makings of a boundary dispute

Boundary Disputes – what you need to know
Boundary dispute are horrible. They have the capacity to ruin your life and can drive some people to desperate measures. My unequivocal advice is that they should be avoided at all costs. I know that sounds a bit daft coming from a lawyer but it really is the best advice you’ll get.

Why are they so bad? Well unless you live on a large country estate the chances are that you’ll come into regular contact with your neighbours – you will depend on each other for certain niceties – where you park your car, collecting balls off each others land, consideration for each other concerning noisy kids, loud music etc.

If you have a boundary dispute then all too often I’ve seen each of these areas become a battle ground, with each side using every available opportunity to wind up the other party. Your home should be a haven for you – somewhere you can relax. If someone is causing hassle that close to you then it can really get under your skin.

So my advice is that if you can feel a dispute brewing, then you need to STOP! Speak to the neighbours fairly and nicely – find out what their concerns are and tell them what your concerns are. If you can do this socially then all the better. You don’t have to fall in love with them but if at all possible you really do want to get along with them.

Perhaps the best way to illustrate this is with an example

My fence has blown down – what shall I do?
This is a classic example of how and why people are concerned about boundaries. People have different attitudes to blown down fences. Some people can’t wait to put it back up again – it annoys them that their garden look so messy with the fence blown down; other people view it as a real pain in the backside – another boring job they’ll have to do when they’d rather be out playing football/walking the dog.

You need to speak to your neighbour, but it’s this first approach that can make or break the relationship.

Some examples that should hopefully work:-
“I’m not certain whose boundary it actually is but I’d be happy to sort it out – is that alright with you. If I do sort it out I’ll need to come round onto your land – is that OK?”

If you’d rather be playing football “I’m not sure whose boundary it is but I’m planning on putting it back up – I just can’t do it until next week – is that alright?”

Hopefully either of these approaches will start a dialogue where your neighbour offers to help, contribute towards the cost, or is just grateful that someone is sorting the problem out.

Contrast that with this:-

“Your fence has blown down – I know it’s your responsibility and I’d like to know when you’re going to repair it”

“The fence has blown down – it’s joint responsibility and I want half of the cost from you now – it’s going to cost £250 and I want £125”

“The fence has blown down – it’s joint responsibility… I reckon you should be able to do it for £20 so here’s a tenner – let me know when you’ve done it.”

“The fence has blown down – it belongs to me and I shall be coming onto your land to enforce my right to maintain it”

“The fence has blown down – it’s my boundary and it’s sat on your land – I demand you give it back”

“The fence has blown down – I know it’s your fault as I’ve seen you breathing out heavily in your back garden. I demand you repair it instantly. I’ve never liked you and your wife is fat.”

Each of these responses will usually get a defensive or even aggressive response from the neighbour – it may lead to them checking their own deeds, and could eventually lead to a needless dispute. The neighbour may actually have been pleased that you were going to sort out the fence, but because you’ve got his back up he’s now going to try and take legal action to let him sort it himself!

Usually at this stage the phrase “I know my rights” is uttered by someone which is usually a sure sign that it’s all going pear-shaped.

It may seem stupid for a lawyer to be arguing against litigation, but to be honest these are not the sort of cases you generally want – both parties end up spending a lot in legal fees but generally won’t feel they’ve gained anything from the experience – they’ve not got value for money. It’s very rare that either one comes out of it as a happy client. We have had some clients who are insistent from the outset that they are going to take it as far as they can, and then later they turn on us and say that we should have told them at the start not to be so stupid!

It’s also worth bearing in mind that neighbour disputes need to be declared when you come to sell your property, and failure to do so is potentially misrepresentation (for which you could be sued). There is a risk that revealing the neighbour dispute could at the very least hold up your conveyancing, and potentially could lose you a buyer. It’s far better to avoid the dispute in the first place.

So to summarise:-
1. You can check yourself who is meant to maintain which boundary
2. Even though you may find this information it’s not necessarily 100% accurate – things can change over the years (boundaries being moved slightly), and in any event the plans that are used aren’t generally fantastically accurate themselves
3. Regardless of the legal position, you need to find a workable solution with your neighbours – speak to them nicely and get them involved.

If you’ve followed all the above advice and still have a problem then email our litigation department or leave a comment below

Here’s the final part of our ultimate first time buyers guide – here we’re dealing with what happens once you’ve found the property and agreed a deal with the seller

Found it! – When you’ve agreed a deal:-

On the face of it you can relax now – you’ve agreed a deal so that’s everything sorted then isn’t it? – - Surely you’ve just got to do a bit of paperwork and everything’s done?

Sorry, but the answer’s no. You may have agreed a deal in principal but it’s a fundamental point in English law that neither party is committed to this deal yet. So both you and the seller could pull out without any reason and there’s no comeback on either of you. Before you have a heart attack please rest assured that most deals will carry on to completion on the terms agreed initially, but I’m afraid you’ve got a while to go before you can relax.

At what stage do I need a solicitor?
NOW! Ideally when you were sorting out the cost of moving house you will have got figures for the conveyancing (Click here for free conveyancing quote). At that stage you would probably have an idea of which solicitor you feel you can work with. Your solicitor’s role in all this is to safeguard your interests when buying the property – they are there to make sure you don’t buy a load of trouble (but if you insist that you’re happy buying a load of trouble then the solicitor will make sure that you do this with your eyes open)

If you’re going to use us then we would recommend instructing us to act at an early stage – even before you’ve decided on the property to buy. As we do no move, no fee, you’ll not lose out by doing this – even if you don’t go ahead. At the point at which the sale is agreed with the seller, the Estate Agent will normally ask for your solicitors details anyway so it’s handy to be able to give them to them.

If you haven’t already instructed your solicitor to act then do it now. They’ll need a fair bit of information about the property – address, price, sellers details, sellers solicitor details, how they can get hold of the HIP on the property, and so on. This will all help them to start the conveyancing

Conveyancing – what’s that all about?
Conveyancing is the legal process of passing ownership of a property from the seller to the buyer. The seller has their own solicitor (it can actually be a solicitor, or a licensed conveyancer, or you can even do it yourself – if you’re mad as a box of frogs that is), and the buyer has theirs.

As an overview, the seller’s solicitor gathers together a load of information about the property – in order to show that the sellers own it, and that the deeds to the property are all in order with no legal problems. They put this information (together with some other documents called searches) in the Home Information Pack for the property (Click here for our Home Information Pack Beginners Guide).

When a buyer is found this information is supplied to the buyers solicitors. They then look through this information and also do some other checking (using things called searches), to make sure that the property is OK for the buyer to buy. If the buyer is having a mortgage then the buyers solicitor will normally act for them as well. Finally the two sets of solicitors sort out the handing over of the money for the property, and registering the buyers solicitors as the new owner of the property.

I’ve written a guide to conveyancing and included that below

Mortgage – getting that sorted out
Although you’ve previously (hopefully) had an indication of the sort of amount you can borrow, you now have to make a formal application for a mortgage offer. A mortgage offer is a formal document from the mortgage company saying that they will lend you X pounds for the purchase of Y property for Z price. If you’ve used an independent Financial Adviser (or IFA) to advise you on the mortgage to go for then they will normally sort out getting the application submitted. At this stage you’ll normally have to pay the mortgage valuation fee, and possibly an arrangement fee for the mortgage (sometimes the arrangement fee is paid later). You may want to have something more than a basic valuation carried out – have a look at the “Survey – do I need one?” section below in relation to this

When you make your application to the mortgage company they will firstly follow up with your employer to confirm that you do actually earn what you said you did. If you’re self-employed they will normally want to see accounts and may require a report from your accountant (your IFA should be able to advise you on what’s required). They will also request a valuer to carry out the valuation on the property. Once all that information has come in they will do some internal processing and eventually send out a mortgage offer to you and a copy of it to your solicitor.

Survey – do I need one?
I mentioned a mortgage valuation fee above – if you’re buying a house with a mortgage then the mortgage company will insist that at the very least you have a valuation prepared (at your expense). Although you are paying for this report, it is being prepared for the mortgage company, not you (although you can see it). As such, they are basically just reporting on what they consider to be the value of the property, and any obvious defects on the property.

For most properties the valuation will be fine for you as well. However if you’re worried about the state of the property itself then you might want to pay more and go for a more in depth survey. Here you’ve got two options – a House buyers report and inspection, and a full structural survey.

House Buyers Report and Inspection:-
This will cost quite a bit more than the valuation but will usually run to 10 sides or more, and will usually make it sound like the house is falling down. They can be useful in giving you a plan of what works you ought to carry out on the property over the coming months and years, including which items are more important/serious. Normally you should be able to direct the surveyor to particular things you might be concerned about to make sure he/she spends enough time looking at them. These reports can be useful but are usually scary to look at – if you’re aware of that before you look at it then it’s not so bad.

Full Structural Survey
If the House Buyers report and inspection makes the house sound like it’s falling down, the full structural survey can make it sound like it’s already happened! It’s basically like the house buyers report on steroids and will go into great detail. For most house purchases this would be overkill.

Guide to conveyancing
This part of the guide is taken from our website – if you want to view it on the website then click here for the conveyancing beginners guide. The version on the website has a jargon-buster built into it which explains in detail all the technical terms used (such as Title Deeds or Searches)

- Step 1 – We will firstly contact the seller’s solicitors and ask for details of how we can get hold of the Home Information Pack (or HIP). This contains the local authority and water searches. If the property is in a mining area we’ll have to request a mining search as well. Searches are simply a list of questions about the property that are sent to the local council, the water authority and the Coal Authority. When we get a copy of the searches from the HIP we’ll have to make sure that the searches are OK for us to use (they have a shelf life of around 6 months and we’ll need to make sure they haven’t ‘expired’. If they have run out then we’ll need to request fresh searches). The HIP will also contain a copy of the title deeds. We’ll also request the Sellers solicitor to let us have a contract, and questionnaires filled out by the seller.

- Step 2 – The only other thing we will need before we can proceed is a copy of your mortgage offer (if applicable). Once we have all of the relevant documents, we will ask you to sign the contract. If you are just buying then we will ask you to for a deposit as well (you will be told how much is needed), but if you are buying and selling then this will generally not be needed.

- Step 3 – We will go through all the above documents with you (either in the office or by preparing a plain english report for you to read at your leisure) and explain any problems there may be with the property. Once you are satisfied that there are no major problems, then you are ready to exchange contracts.

- Step 4 – Once the buyer and the seller are ready, a Completion Date (the “moving date”) is agreed. We then exchange contracts (this means swapping the contract signed by the seller for one signed by the buyers – together with a deposit provided by the buyers). Once contracts are exchanged the contract is binding and neither party can withdraw without incurring massive expense.

- Step 5 – On the Completion Date, we hand over to the seller’s solicitor the remainder of the purchase money and in return receive the transfer document and the title deeds.

- Step 6 – We must then within twenty-eight days arrange for the payment of stamp duty (if appropriate) and, within two months of the completion date, apply to register the buyer’s ownership at the Land Registry.

A word about chains
The above 6 steps set out the procedure for one transaction – one seller(s) selling one property to one buyer(s). What normally happens however is that the sellers are themselves buying on from someone who’s also buying on – and so on until you get someone who’s selling but not buying another property (e.g. they are emigrating, or have already bought their other property or any other reason). This group of transactions is known as a chain.

If there is a chain of transactions, steps 1 to 6 above need to happen for every single person within that chain. The complication comes from the fact that the exchange of contracts bit (which is the first really important step – it’s when everything becomes binding) has to take place for every party in the chain on the same day at the same time – logistically this can be a bit of a nightmare. The other problem is that every party in the chain will have to agree upon the completion (moving) date. Normally this all takes place on the same day – so that in a long chain of 5 or more parties they will all be moving house on the same day.

The hassle of being involved in a chain comes from the fact that each party in the chain will have their own set of priorities and attitudes – one may be in a hurry, one may now be bothered, and one may be unable to move before a certain date (but hasn’t told anyone that yet!). It’s not unusual to see clients to sign contracts and then phone up the chain to see how close we are to exchange, only to find that the person at the top or bottom of the chain has only just started their transaction. Everyone in the chain then has to wait until they’ve caught up before it can go ahead.

As buyers it’s worth your while trying to find out how long your chain is at the outset, and what stage each party in the chain is at. The Estate Agent should be able to do this at the start – it’s in their interest to know this information as well. It’s good to find this information out as early as possible so you don’t get any nasty surprises later on. There’s nothing wrong if you phone up each of the parties in the chain – if you can all stay in touch throughout the transaction it can help to speed up the process of agreeing dates for moving etc – but don’t agree anything without confirming it with your solicitors first.

At some stage near to completion it’s a good idea to meet the sellers and get them to show you how to work the boiler, thermostats, where the main water stopcock is, main gas tap, main electrical supply switch, and so on. It’s not the end of the world if you can’t do this but it’s nice to know it in advance

After it’s yours – moving in
At the end of the conveyancing process you’ll finally get the keys to your new house. This is a very exciting time (and can also be a bit scary!).

If you weren’t able to go through stuff with the sellers before completion then it’s a good idea to find out straight away where the main shut-off is for the water, gas, and electric – should something go wrong it’s no fun looking for this stuff in the dark with a water or gas leak!

You might want to suggest to the sellers that they redirect their post to their new house – they can do this by telling the local post office – it costs a small amount (can’t remember how much – £30 or so) and lasts for a year I think. It’s worth you mentioning it to them so you’re not continually getting their mail and having to forward it on yourself. This service is useful to them and useful to you.

On the day you move in it’s a good idea to take readings from all the meters and let the suppliers know. The sellers should have done this but it’s easy to forget. You then need to contact them and let them know that you’re taking over the supply – they’ll have their own procedure for switching this to you. You might also want to switch utility suppliers at this stage – it can often save you money. www.moneysavingexpert.co.uk has a good section on this.

You now need to let everyone know your new address. Don’t forget to let the council know as well – you’ll be liable for council tax from the date you move in.

Before unpacking your stuff – put the kettle on and have a nice cup of tea and a biscuit – you’ve earned it. You probably won’t have to do all this again for a few years – the average person moves every 7 years.

I hope this guide has been useful to you – if you’ve got any questions about it by all means pop them onto the form at the bottom of the page and I’ll answer them as soon as I can

Cheers

Mark

Here we go again! This part deals with the next stage – you’ve found some properties that you’re interested in having a look round – where do you go from here? Read on….

Looking around houses or flats

After all your research you’re going to have a number of properties you want to look around. This is new territory for most people and can seem a bit weird and awkward. Sometimes you’ll just be accompanied by the Estate Agent and the house itself will be empty, but more often than not it will be the seller who shows you round their own home.

Tips for viewing properties
It’s important to bear a few things in mind before you go on these visits.
- You are going to walk around a stranger’s home. Whilst you do need to consider whether the house is what you want, be polite. If you do eventually strike a deal with these people your lives will be intertwined with theirs for a very stressful period in each of your lives. You don’t want to irritate them at the start. Also it may be they later have to choose between you and someone else offering the same amount. If you’re the one who laughed at their bathroom suite and pulled a face at the state of the kitchen then it doesn’t take a rocket scientist to work out that they’ll probably prefer the other people.

- Don’t go alone. Although sometimes this is unavoidable, wherever possible take someone else with you. There is the safety aspect of course, but I’m thinking more about the ability to discuss the property with someone else when you leave. Who to take with you? If two of you are buying then you should both go and see the property together. If you’re buying alone then a friend or family member would be useful.

- Come back with someone who knows what they are talking about. If you’re interested in a property it’s a good idea to come back with a builder friend, parent, DIY nut to give you a second opinion. We saw a house we liked and took a builder friend round. He pointed out the roof was rubbish, and the walls were damp – things we had no idea about before speaking to him. A surveyor may spot these things for you later on but it’s a good idea to be able to weed out the bad properties yourself at an early stage without having to pay surveyors

- Photographs – I’ve found it very useful to take my own photos when walking round a property – when thinking back later it can be hard to remember the layout (or even which property it was!) and your own photos can help with this – a camera phone is fine for this. However you must make sure you ask the owners first if they are happy with this and explain why you want to do it– if they aren’t then don’t push it – you’re a guest in their house

- Speak to the estate agent. How long has the property been on the market? Have many people viewed it or not? Has the price been reduced? Have they had any offers yet? In all this be very aware of who you’re speaking to – if you’re in the estate agents office talking to the negotiator he wants to get someone to buy the property. That’s not to say they’ll be lying but just take it into account who they are.

- Speak to the sellers – it’s a good time to ask questions that might help you to get more of a feel for the place. Also from a social viewpoint things can sometimes get a bit stilted and awkward, and having a few questions up your sleeve can help to get them talking about the property. Things I’d normally like to know include:-
o How long have you lived here?
o What are the neighbours like?
o What’s the area like?
o Why are you moving?
o Have you found somewhere else to buy yet?
On asking these questions you are really just trying to find any potential problems – such as that they are moving because the area has gone to the dogs, their neighbours are a nightmare. Again when hearing their answers you’ve got to make a judgement call on it – it all helps you to get an idea of their position.
o Are carpets and curtains included?
Carpets and curtains are one of those things that can cost a lot and (usually) have to be custom-made for the property itself. Whether or not you want to pay anything extra for them is up to you – even if you don’t like them it can be nice to have some sort of covering in the property giving you time to wait until you can afford to replace them with ones that you like. Sellers often over-value what they think they are worth – going on what they paid for them as a base value. If carpets and curtains are not included then it may be worth asking if they’d be prepared to throw them in. It’s one more thing that can be brought into negotiations later on if you’re interested in the property.

(altogether now..) “Fallink in luff again, vot am I to do”
Sometimes you come away from a house and you absolutely love it – this really depends on the sort of person you are – some people fall in love with property and to others it’s just a place to live. I fall into the first category and can easily get carried away. And it’s exactly that – getting ‘carried away’ – that you want to avoid.

When you come away from the property you really need to analyse why you love the property (or if ‘love’ is a bit strong, why you really liked it). When we bought our first property we did this all wrong. Looking back on it we bought the property because the sellers made us a cup of coffee and sat down and talked to us about the house. Seriously that’s why we chose the property. We viewed 2 houses that evening, both 2 up 2 down mid terraces, and in the next streets to each other. The first one was empty and the agent showed us round. It smelled a bit damp (all empty properties will smell a bit damp because they usually haven’t been heated properly), but it had a good sized dining kitchen, and it had central heating. The second one had stone cladding (which we hate – sorry if you’ve got it – it’s just personal opinion) but it was warm (because they’d had the fire on – it didn’t even have central heating) and they made us a cup of coffee. It was also marginally more expensive.
If we’d sat down and analysed what we thought of the two properties in terms of what they had to offer I’ve no doubt we would have bought the first one. But we didn’t and basically bought the second one because of a cup of coffee.

So please learn from our mistake and if you’ve fallen in love with a property, try and analyse why this is so, and make sure you’re buying the best property for you, and not because someone made you a cup of coffee. Viewing on a sunny day can show a property in a great light, and conversely viewing on a damp foggy evening can make many houses seem dreary (especially if they are vacant and lit by bare light bulbs)

How to negotiate on the price
OK so you’ve found a property in your price bracket, in the area you want to buy and you want to make an offer – what do you do next? Well it’s up to you really. There’s nothing to stop you discussing price when you’re in the house with the seller. That really depends on your personality and theirs. If you’re not comfortable going the whole hog and negotiating then you can ask them if they are open to offers on the price. From their response you can get an idea of how low you can go.
Most people do their offers and negotiations through the Estate Agent. There’s no rule that says you have to do this but it’s more comfortable to most people.

In deciding what offer to make you should take into account all the information you’ve gathered so far :-
- what houses are going for in the area (and by the way in relation to this you can actually find out what they actually sold for – not just asking prices – you can try www.houseprices.co.uk www.hometrack.co.uk – both give you the information very quickly – some other sites require registration and jumping through hoops before they tell you. When looking at these make sure you’re comparing like for like though – the property may be in the next street but it could also be twice the size of the one you’re interested in)

- Any work needed on the property – for this you’re going to need a ballpark figure for what you think needs doing, and take that into account in your offer. So you can say, for example “ We know the asking price is £245K but we reckon the damp proof course has failed, a couple of rooms need replastering and the roof needs some repairs. Because of all those things we want to offer £235K”. The danger of this approach (linking your requested discount in to specific works) is that the sellers say they can get all the work required done for £4K so if they sort those things out will you increase your offer to £241K. There’s nothing that says you have to link a lower offer in to actual works – you can just offer a lower price.

- The information you already know about the seller – if you know it’s been on the market for a while and that they are selling to move their child to another school and they’ve found the one they want to move into and it’s June and they want to be in the new house before the start of the new school year in September – then they may be desperate to sell – so they may take a lower offer. On the other hand if you know they’ve already had two offers slightly below the asking price which they’ve rejected then you know it’s probably not worth you doing the same.

- What’s included – carpets, curtains etc. If you want them to be included then you’ll need to make that clear when you make the offer – otherwise you can beat the seller down and reach agreement only to find them later coming back and saying they want another 2K for carpets and curtains
- What you can afford. Bear in mind you may well be entering into negotiations here so if the house is at the limit of what you can afford it’s probably wise from your own point of view to be offering less – you can always then increase your offer and still be within your budget. If you start at your maximum then you’ve nowhere to go. If you do this (make the lower offer first) then also psychologically the seller has moved you up a bit. There are no real rules on this – some people come up with a take it or leave it offer and some keep coming back for more (or less!).

There are a couple of points in your favour though:-
1. You’re a first time buyer. You are like gold dust in the property market. Most other people looking round will also have a property to sell and therefore they can’t actually do anything about buying until they have sold their own property. You on the other hand can move as soon as they can.
2. The Estate Agent must communicate any offer you make to the seller – even if it’s a stupid one. So whatever you offer the Estate Agent needs to let them know about it – if the estate agent says ‘I don’t think they’ll go for that’ then that’s fine but they’ve still got to put the offer to the seller to get their instructions

Don’t be afraid of making a stupidly low offer – that’s the advantage of making your offer through the estate agent – it takes the emotion out of it. Even if the seller is insulted by the offer, the estate agent will normally explain to them that even though it’s low it’s still an offer, it’s from a first time buyer, and you may be prepared to increase.

Conversely if you make a stupidly low offer don’t be surprised when they say no. You can always then increase your offer. In the example above of a property where they’ve already rejected 2 offers just below the asking price you’ll probably be wasting your time in doing the same (Never say never though – the other two offers may have been from people who weren’t yet ready to move – you’re a first time buyer).

What happens here really depends on so many things – the attitude of the seller, the marketplace, the particular type of property, the area, and so on. Until you ask the question though, you don’t know the answer – on a property we bought in the early 1990’s the previous buyers had pulled out because of a defective roof (which the seller was having to get sorted out). The sellers had already moved down south because of their job and so were keen to move. We actually didn’t know any of this but made a low offer – which was accepted straight away. If we hadn’t made the offer we wouldn’t have got the property.

At some stage in all this you should eventually get the call saying that the sellers have accepted your offer – you’ve got a deal! So we move onto the next stage. That will be covered in the final part of this blog – part 3, coming next week.

To go straight on to the final part of the ultimate first time buyers guide click here

Moving house – the ultimate first time buyers guide

I’ve seen a few guides for first time buyers knocking about but I’m not sure that any of them really hit the mark – they tend to just cover the bit that the person writing it is involved in – so if written by a solicitor they just cover the legal bit, if by an estate agent then just the property selling bit. I thought I’d have a go at doing something a bit wider (and hopefully more useful) than that – and here it is.

This guide is meant to cover buying a house or flat in England, Wales or Northern Ireland – note that Scotland has a different legal system in relation to buying a property. Also during the guide I’ll often talk about buying a house, but exactly the same applies if you’re buying a flat.

There’s a lot here! Because of that I’ve decided to split the guide into 3 parts – I’ll be doing the second part next week and the final part the week after.

Part 1 deals with your research – before you start looking round houses
Part 2 deals with the process of looking round houses – what to look out for and so on
Part 3 covers what happens when you strike a deal – the process from then until you move into your new home

Research – before you actually start
You can’t just jump in there and start the process off – you need to do a bit of research first, starting with…

1. What can you afford?
Good question – and it’s probably the most important one to answer before you start. Unless you’ve got a shedload of cash hidden away then the likelihood is that you’ll need to get a mortgage. The bad news is that even with a mortgage you’ll probably still need to have a small shedload of cash available.

What exactly is a mortgage?
It’s a loan, normally over a longer period of time than most loans – often over 25 or even 30 years. The other difference to ‘normal’ loans is that a mortgage will be fixed onto the title deeds of your house (they actually just write details of the mortgage onto the title deeds). That means whenever the house is sold then the mortgage must be paid off. It also means that if you stopped paying the mortgage then they could repossess the house and sell it to clear off the loan.

Can I get a mortgage?
In deciding whether to give you a mortgage the bank or building society will basically look at 2 things
1. Can you afford to pay the mortgage?
2. The value of the house

Deciding whether you can pay the mortgage involves looking at your income – they normally use a multiplier on your salary here – so for example they may lend you up to 5 times your annual salary as a mortgage (this multiplier in turn is affected by your credit rating). If there are two of you then they usually have a slightly different formula (e.g. 4 times the joint salary). So if you’re earning £20K a year they’d lend you a maximum of £100K as a mortgage. Don’t take these figures as gospel – they are just examples.

The value of the house is important to the mortgage company because it affects the amount of ‘security’ in the house – they need to be sure that if it ever came down to selling the house to get their money back, that the house would be worth enough to cover the debt. They link this in to the percentage that they are lending.

So for example if they lent £50,000 on a house worth £100,000 then if they eventually had to repossess they wouldn’t have a problem – even if they took a price reduction for a quick sale and sold if to £90,000 then they would get all their money back.

If however they lent the full 100K, and later had to repossess then there is more of a risk of them being out of pocket – they will have legal costs in repossessing the property and also will want to get back the interest they should have been paid. So from the lender’s point of view a 100% mortgage is risky

It’s a bit difficult to advise properly here because I’m writing this in August 2009. The mortgage market has been on a massive roller coaster for the last year, and it’s hard to see how things are going to be going forward.

What’s changed then?
Well if you go back to mid 2008 and earlier – for the previous 30 years or so it was not too hard to get a 100% mortgage. Although 100% mortgages are more risky for the lender, prices have risen so consistently over the last 30 years that if there was a problem, then by the time the property was being repossessed it had gone up in value and there was plenty of money for the mortgage company to be paid from.

During the credit crunch/recession/bank collapse mortgage lenders came under a lot of pressure not to take any risks. Because of this and a whole host of reasons that I don’t fully understand (but about which everyone seems to have an opinion) it’s not as easy to get a mortgage now as it used to be. At the time of writing 100% mortgages have only just started to come back onto the market. Anything I write here any what deals you can and can’t get will be out of date, so the best thing is to get yourself a broker to let you know what you can actually borrow.

An excellent source of information on mortgages generally is www.moneysavingexpert.com – they have quite a big section on mortgages. When I remortgaged a while ago I followed a recommendation on their site for a broker that looks at the whole of the market – I used London & Country (www.lcplc.co.uk) – I phoned someone up and they gave me examples of what I could borrow. I get no incentive for recommending these sites – I just think they’re good.

Personally I’ve found a lot of the online stuff so confusing (i.e. with so many conditions, and exceptions) that it was easier to speak to a human being and let them tell you what deals they can get you.

One last point on this – Don’t believe the hype. Don’t listen to what you hear in the press – their role is not to tell you whether or not you can get a mortgage, their role is to sell newspapers – nothing more, nothing less. So don’t be put off by press speculation about mortgage availability – speak to someone who knows and find you what you can actually borrow.

So from all that, you should have an idea of what sort of money you can borrow on a mortgage and how much money you will have to chip in towards the purchase price yourself. It’s also a good idea to work out what other costs you’ll have to fork out when you buy a house (e.g. conveyancing, stamp duty etc – if you can’t wait then click here for an instant conveyancing quote) but I’ll come back to that later – this talk of mortgages is practically sending me to sleep – lets get onto the house itself!

2. Finding the property of your dreams
The good news over the last 10 years is that with the help of the internet it’s got a lot easier to search for properties – you can search within a given area, London borough, price range, whatever. Perhaps the best known of the property portals is www.rightmove.co.uk but there are a fair number of others out there too such as www.primelocation.com and www.home.co.uk

Using these sites helps you check out a whole area quite quickly. However it’s still worth taking a drive around areas you’re interested in – you sometimes get a feel (good or bad) for an area that doesn’t come across on the websites – there could be a scary-looking pub at the bottom of the street – or a wonderful park. It’s also worth driving or walking through at different times of the day (and night).

On the question of where you should buy – although it’s corny it’s still true – the 3 most important factors are Location, Location, and Location. Buying in a good location will make it easier when you come to sell. However if a property’s in an excellent location then of course you’ll pay more for it, and it’s sod’s law that the one you really like is just too expensive. You may therefore have to compromise to get a property that contains all you need and in an area you can afford.

There’s so much out there!
I know whenever I’ve started to look for a property, I’ve found that I get very excited by that massive number of properties available – once you start looking it seems there are loads and loads – you must be able to find something in this lot!

There’s nothing out there!
However when you start looking through you start to realise that this one’s too small, that one’s next to a pub. This one’s got a pokey kitchen, that one smelled funny, and so on. It’s not long before you do an about-face and decide that there’s nothing out there after all. What you’re doing here is narrowing things down – which is very important unless you just want to be viewing properties every day for the next year.

Stuff you might want to take into account to help narrow down the choice includes
- How many bedrooms
- Does it have central heating? If so – is it fairly recently installed?
- Does it have double glazing?
- What’s the kitchen like?
- What’s the bathroom like?
- How big is the garden?
- Is there a garage/off street parking?

Now it may be that because of your price range and where you want to buy some of these things are non-starters. But things like the number of bedrooms is pretty crucial and should help you to weed out a lot of properties quite quickly.

What sort of property should you look for?
Most first time buyers will be buying a smaller, cheaper property. If you’re in London this will almost certainly be a flat, (most of London is divided into flats) and if you’re in other parts of the country flats will still be something to consider because they are generally cheaper than houses. Most first time buyers will either be buying a new or newish flat, maisonette, or town house, or an older mid-terrace property or flat.

New properties
A number of builders have gone into the market of selling starter homes – building developments of flats, town-houses and maisonettes. These can often look very attractive as you can normally move in with no work to do.

Pro’s and cons of a newer property:-
- extras are often thrown into the price such as dishwasher, washing machines. Whilst these are useful they can sometimes be used as justification for a slightly higher price. The only reason I mention this is that if you have to sell the property again quite quickly then it might not fetch what you thought – when you’re coming to sell yourself then things like the washing machines etc will generally be ignored
- Don’t forget you’re buying from someone whose job it is to sell you the property (as opposed to buying from a private seller – an ‘amateur’. That’s not necessarily a problem – just bear it in mind)
- You will normally get a 10 year guarantee on the property from the date they are built
- The rooms in newer properties can be smaller than on older properties
- Insulation in newer properties can be a lot better than on older properties
- You usually have no work to do – you can just move in
- The property has no ‘character’
- People generally love them or hate them

Older properties
As a starter home you’re probably usually looking at mid terraced properties – from around 100 years ago. Usually solidly built but at that time builders paid little attention paid to damp proofing so this has often been a problem over the years. However an injection damp proof course usually sorts sorts this out and most mid terraces should have one.

Pros and cons of an older property:-
- You’re more likely to have to do stuff to an older property (again though the previous owner may have sorted all this out)
- They can have character
- Insulation etc will not normally be very good (but can be remedied quite cheaply)
- Double glazing – they won’t necessarily have this
- Again people love them or hate them

Finally in terms of the value of houses on the same street, a good piece of advice is to try and buy the worst house on the street – it will be pulled up in value by the better houses; conversely a spanking house on a shabby street will never achieve it’s potential value.

What about a fixer-upper?
Usually when you’re looking round you’ll find something that would normally be out of your price range because it ‘requires modernisation’ – a fixer-upper. Now you don’t need me to tell you whether it’s within your abilities to do DIY work on a house – personally it’s something I really enjoy, but if you’re taking on something like this:-
- Go in with your eyes open – get estimates for all the work required
- This WILL cause hassle with your mortgage – especially if you’re having a high percentage mortgage – they will often make a retention (hold back part of the mortgage money) until key works have been done – you’ll then have to come to an arrangement with the seller on getting some of the work done between exchange of contracts and completion OR borrow extra money to tide you over until the work has been done
- If you’re planning on doing the work yourself you need to make sure you can comply with any statutory requirements (planning regulations, building regulations etc), but also make sure you’ll have the time – fixing up a property yourself is rewarding but knackering. It’s no use having a lovely house and a broken marriage!
- If you have the patience, skill and time, it can mean that you get into a nicer property than you thought you could

3. Is it the right time to buy?
It’s stick my neck out time! I would say that YES! this is about as good a time as you’re going to get to buy a property. Prices are on the rise once again. Interest rates are at an all time low. Although mortgage deals are nowhere near as good as they used to be when compared to the bank of England base rate, in terms of the actual rate you’d be paying they’re still pretty good.

As an example a couple of years ago the bank of England base rate was 5.75% At that time you could get mortgages with special introductory periods of below the base rate – Cheltenham & Gloucester were doing a 2-year tracker deal at 4.74%

Currently the bank of England base rate is 0.5% One of the best trackers you can get (today) is from RBS/NatWest – at 2.89% which is 2.39% over base.

Now if you focus on comparison with the base rate it looks awful – you used to get a deal below base and now the best you can get is way over base. However what actually matters to you is the amount you’re paying out. 2 years ago you’d have been paying out 4.74% – now you’d be paying out 2.89% – that’s about £150 a month less!

So even if the banks aren’t offering great deals when compared to the base rate, the actual rates you can get now are actually pretty damn good!

In terms of house prices we’ve seen house price increases in all the statistics for the last few months. As conveyancers we’ve noticed this in terms of the volumes of people moving house. The low point for us was the 6 months leading up to January 2009 – from February the number of people moving has gradually risen.

It’s impossible to say how quickly prices will rise from here on in, but I do believe they are only going one way now for the foreseeable future and that is upwards.

4. Cost of buying a house (legal fees stamp duty etc)
Part of working out what property you can afford is working out the total costs of buying. Here are some of the things you should take into account:-
- Mortgage administration fee – many mortgage companies charge this – it’s basically a fee for saying yes. They charge it because they can. It can be anywhere from a few hundred pounds to a few thousand but should be made clear to you at the outset of arranging your mortgage
- Mortgage valuation fee – This is the mortgage company getting a valuation on the property – you have to pay for this – it’s normally a few hundred pounds. See note below on Surveys
- Conveyancing fees – this is where we come in – Click here for an instant conveyancing quote. This quote will also include things we need to pay to other people on your behalf (such as Stamp Duty, Land Registry Fees, and additional searches)
- Moving costs – are you going to use a removal company, hire a van, or borrow your dad’s car?

5. HIPs and Energy Performance Certificates
Every house being sold now should have a Home Information Pack (usually called a HIP) prepared on it and available for you to look at. It’s worth checking this out now as any HIP prepared after the 6th April 2009 will include a questionnaire filled out by the sellers – useful to read through this before you look round the house as it can give you a bit of background information. The HIP will also include an energy performance certificate (known as an EPC) – this basically produces an energy rating for the house.

At the time I’m writing this (August 2009) this information is largely irrelevant – other than that if the house is inefficient it will cost more to heat than one that is more efficient. However, in view of the importance of all green issues politically, I think it can only be a matter of time before we start to see tax implications for inefficient houses – so for example if your house is very inefficient you may pay more in local government tax. It’s not relevant yet, but it may become a factor in the future. Having said that, even if your house is inefficient you will be able to take steps to help it (such as more insulation, energy-efficient light bulbs and so on).

If you want a quote for providing you with a HIP, then click here for a free HIP quote.

That’s it for now. Next time we’ll deal with the process of looking round houses, and making an offer to buy one.

To go to Part 2 of the ultimate first time buyers guide click here

Cheers

Mark