When making a purchase, most people engage a solicitor to do the conveyancing. There is nothing to prevent you from doing it yourself but if you have no expertise or training in this area, many people think it is more sensible to seek professional advice.
Subject to contract
When you make an offer on a property and it is accepted by the vendor, the property is then deemed sold to you ‘subject to contract’.
This sounds binding – but it isn’t. You can pull out at any time after this stage simply by making a phone call to the estate agent. Similarly the vendor can gazump you by accepting a better offer from someone else.
Many people question the flimsiness of property law in this area, particularly since purchasers can incur considerable costs on items such as surveys and legal fees, only for the deal to fall away.
In Scotland, where surveys are carried out before an actual offer is made, buyers and sellers have a legally binding contract to complete the sale much earlier in the process.
Exchange of contracts and completion
Once you have agreed the sale, there are a number of processes to go through. Your solicitor will carry out a local authority search to check the title for the property you are buying, including definition of boundaries and also whether there are any proposed developments in the area.
There is no legal necessity to carry out a survey, though if you are borrowing money a lender will insist upon it.
Once the relevant searches and surveys have been completed, you should be in a position to exchange contracts.
This is the first time the sale becomes legally binding in any way. If you pull out at this stage there will be hefty penalties to pay.
Once contracts have been exchanged, a completion date will be set – sometimes it is on the same day – when the vendor receives his or her money and the property passes to the buyer.
Leasehold and freehold
When you buy the freehold of a property, you are buying not only the building but also the land on which it stands.
If the property is leasehold then someone else owns the land and you will probably be required to pay them ground rent and, sometimes, management charges.
Leases usually run for a period such as 99 years or, very commonly, 999 years. Much central London property is on much shorter leases, such as 15 and 20 years, where there is a meaningful prospect of the freeholder getting the property back.
When you are buying leasehold property you need to check your obligations under the lease.
In Scotland there is no such concept as freehold or leasehold, and when you buy a property it is yours.
When purchasing property you need to thoroughly establish boundaries and whether neighbours have any rights to come on your land.
Neighbour disputes are becoming increasingly common. If your neighbours are noisy you have the right to serve an abatement notice on them and have, for example, the offending stereo forcibly removed.
It is always advisable to seek less extreme solutions to neighbour disputes. You are now legally required to declare such problems when selling your property, which may deter potential purchasers.
Renting out property
When renting out property you must ensure that you comply with all the relevant safety legislations and follow the correct legal procedures, such as having a properly drawn up tenancy agreement.
You should not take any shortcuts to save money. Making mistakes could prove costly, particularly in an increasingly litigious society.
Using an agent
If you use a letting agent they will normally guide you through the legal process of letting your property, such as carrying out gas and electrical safety checks and setting up the tenancy agreement.
If things go wrong, say, for example, your tenant stops paying the rent, it will be down to you and not the agent to take legal steps to pursue the outstanding moneys or seek eviction.
The agent’s responsibilities will stop after a few letters chasing up the rent.
Gas and electrical safety checks
This is an area where the law has been tightened up due to tragedies where tenants have died as a result of unsafe gas and electrical appliances.
For gas you have to comply with the Gas Safety (Installations and Use) Regulations 1998. You are required to get an annual gas safety certificate from a CORGI registered gas fitter. The tenant will receive this certificate on entry.
You are required under the Electrical Equipment (Safety) Regulations 1994 to make sure all electrical equipment, including the wiring systems and all plugs and sockets, are safe. Unlike with gas, you do not require an annual safety certificate.
You must ensure that any furniture you leave in the property complies with relevant fire regulations. One of the easiest ways to comply is to put in new soft furnishings or to leave the place unfurnished. Landlords who leave tatty old furniture in rented property are almost an extinct breed in today’s competitive rental market.
Most rental agreements are now based on an Assured Shorthold Tenancy, which is a relatively new form of contract.
It gives landlords an automatic right to have the property back once the shorthold period, usually six months, has expired.
The landlord can then serve two months’ notice on the tenant and can be guaranteed that a possession order will be granted by the courts.
This can take time where local courts are congested by such cases, but the right is there.
You can also get your property back on other grounds during the shorthold period, such as if there are rent arrears or if the tenant is guilty of anti-social behaviour.
Once the tenancy expires there is no necessity to begin another agreement since the tenancy can continue as a periodic one on the same terms as the initial tenancy- the notice periods usually being one month for the tenant and two months for the landlord.
If you use a letting agent they will do all the documentation for you, but if you let your property privately you can buy a tenancy agreement from a high street stationer.
You can also get one drawn up by a solicitor for a few hundred pounds.
If you let to friends on a casual basis, it is still advisable to have a written agreement in place.
The law gives the landlord certain protection even if there is nothing at all in writing. A verbal understanding will still be deemed to be a tenancy agreement, but this would make any court proceedings complex and costly.
Never try to forcibly evict a tenant. Even if they are refusing to pay rent and trashing your luxury buy-to-let apartment, if they are in possession of a tenancy agreement, the police will merely re-install them and probably put you on a charge.
You will also play into their hands because there are professional bad tenants out there who know how to play the system. This sort of behaviour may get them an extended free stay.
Stay with the legal process or even try to cut a deal with them to leave, letting them off rent arrears, for example, in return for getting the property back.
Return of bond
The tenant is entitled to the return of his or her bond in full, unless you can point to any damage beyond normal wear and tear that they need to pay for.
If you let through an agent, an inventory will normally be carried out. When the tenant leaves you should insist on another one being carried out.
Landlords get a bad name for not returning bonds, and it is important to deal with this correctly.