Buying or Selling Your Home Guide
Buying or selling your property in the UK can be a complex and lengthy process, so it’s useful to educate yourself on the various stages involved.
In this buying or selling your home guide, you’ll learn everything that you need to know, covering topics such as:
- The basics of buying or selling your home
- Purchasing a property with another person
- Energy Performance Certificates
- Affordable Home Ownership Schemes
- Conveyancing processes
- Working with estate agents
- Exchange of contracts
- Sale completion
- The tax implications of buying or selling a property
- Stamp Duty Land Tax
- Capital Gains Tax
The basics of buying or selling your home
The process of buying or selling a home normally takes approximately 2 to 3 months. However, if you are part of a property chain, it can take longer and be more complex.
Purchasing or selling a property involves several steps and both parties will need the support of a conveyancing solicitor. Individuals who are selling will need to obtain an Energy Performance Certificate for their property. If a seller is working with an estate agent, interested buyers will need to make their offers via the agent.
When a buyer’s offer is accepted, the seller must draw up a contract to legally transfer ownership of the property. Once the contracts have been exchanged, the offer becomes legally binding. The buyer may be required to pay tax, depending on the value of the property.
Purchasing a property with another person
Up to three people can purchase a property together. There are different routes to joint ownership, including:
Owning a property as joint tenants
This purchasing option means that all tenants own an equal share of the whole property. If one owner passes away, the living tenant(s) automatically inherits the property. As a joint tenant you cannot transfer your ownership as part of your Will.
Owning a property as tenants in common
Tenants in common have the option to own different shares of the home. The property will not automatically be transferred to the other owners if one owner passes away. If you would like to transfer your ownership as part of your Will, you have the right to do so.
Energy Performance Certificates
When a property is rented, sold or built, that property must have an Energy Performance Certificate. Landlords and sellers are required to obtain an EPC for potential tenants and buyers before they advertise the property to rent or for sale.
You must order an EPC for potential buyers and tenants before you market your property to sell or rent. An Energy Performance Certificate contains suggestions about lowering energy usage and information about the average energy costs and usage for a property.
An Energy Performance Certificate last for ten years and it offers an efficiency rating on a scale of A-G, (with A indicating the highest grade of energy efficiency).
In Scotland, you are required to present the certificate in the property (for instance displayed inside the meter cupboard).
Affordable Home Ownership Schemes
Affordable Home Ownership Schemes are financial assistance programs offered by the government. These schemes give financial help to individuals so that they can buy a property.
Under an Affordable Home Ownership Scheme, you could receive:
- A loan to assist you with the expense of a new-build property (providing that this is your first home and you are purchasing in England or Wales).
- Assistance to purchase a property through a shared ownership scheme in the UK.
Conveyancing refers to the process of transferring ownership from the seller to the buyer.
When the offer has been formally accepted the individual selling the property must draw up a legal contract to support these processes.
The contract must include the following information:
- The boundaries of the property
- How much the seller has purchased the property for
- Any relevant rights or legal restrictions related to the property surroundings
- Any fittings and fixtures that are included in the sale
- Information about gas and drainage services
- Planning restrictions that may affect the property
- The sale completion date
Our property conveyancing solicitors at Stephen Rimmer can support clients to draft the legal contract, negotiate the terms if appropriate and answer any queries from the buyer’s conveyancer.
For support with your conveyancing processes today, get in touch with our specialists at Stephen Rimmer.
Working with estate agents
If you’re working with an estate agent to sell your home, you’ll need to obtain a legal contract between yourself and the agent.
Unless you follow the contract terms, you could end up in legal trouble. Estate agents are obliged to treat potential buyers fairly. They are required to promptly deal with offers and to pass on other offers for that property until the point where contracts are exchanged.
Exchange of contracts
Once the buyer and the seller are satisfied with the terms of the contract, both parties sign copies and send their signed copy to the other party. At this stage, the sale becomes legally binding, meaning that neither party has the option to change their mind (unless they agree to pay compensation).
After the contracts have been exchanged, the sale is completed, meaning that:
- The legal documents required to transfer ownership are given to the buyer
- The purchase price is transferred to the seller
- The individual who has sold the property moves out
- The seller gives the keys to the party who has purchased the property
- The sale is legally complete and the property is now owned by the buyer
The tax obligations of buying or selling a property
When you buy or sell a property in the UK, there are various tax obligations you’ll need to be aware of.
For example, you may be required to pay Stamp Duty Land Tax if you are purchasing a home in England. If you are purchasing a property in Wales, the equivalent is Land Transaction Tax.
When selling a home, you may be required to pay Capital Gains Tax.
Stamp Duty Land Tax
Whether or not you’re liable to pay Stamp Duty Land Tax depends on the property value and whether you are a first time buyer.
From 1 October 2021, anyone who is not a first time buyer will need to pay Stamp Duty Land Tax if the purchase price was over £125,000.
First time buyers will not need to pay Stamp Duty on properties purchased for £300,000 or less.
If you are required to pay Stamp Duty, it will be calculated on the value of the property over this threshold. For example, if you are a first time buyer purchasing a property for £400,000, then the first £300,000 will be exempt from Stamp Duty and you will only need to pay it on the £100,000 by which the property’s value exceeds the threshold.
SDLT also applies if you trade another property or shares as a means of purchasing a new home.
Capital Gains Tax
If you are selling an asset and that asset has gone up in value since you bought it, you are liable to pay Capital Gains Tax. Generally, if you are selling your only property or your main property, you will not be required to pay CGT.
There are some circumstances where you might be required to pay CGT, for instance:
- If you sublet part of your property
- If you use part of your property as a premises for business
- You are a property developer who purchased the home to make a profit
- The property includes over 5,000 square metres of additional buildings
You will not be required to pay Capital Gains Tax if you are disposing of or selling your property, providing that all of the following circumstances are true:
- You have been living in the property as your main home the entire time that you’ve been the legal owner
- You have not used part of your property to run a business or sublet part of it
- The buildings and grounds that make up the property cover less than 5,000 square metres.
If these circumstances apply, you qualify for Private Residence Relief and therefore do not need to pay Capital Gains Tax.
Contact Stephen Rimmer property conveyancing solicitors
If you’re buying or selling a property and need the support of a conveyancing solicitor, contact our experts at Stephen Rimmer.
How can we help you?
Call us today on 01323 644222 to get the specialist help you need.