When you buy a property, third party costs (known as "disbursements") can cost as much again as the legal and administrative work undertaken by your conveyancer. This article provides a brief summary of what these disbursements actually involve, and roughly how much you should expect to pay for each element.
In order to carry out the legal transfer of ownership, your conveyancer will have to pay money to both public authorities (local and national) as well as and private sector organisations. Some costs will vary from one local authority or utility company to another, so it is not possible to give precise figures. Thankfully VAT should not be payable on most of the local and national authority charges, but will be charged by banks and utility companies for transfer fees and drainage searches. Price guidelines should broadly reflect the impact of any VAT charges that apply.
Local Authority Searches (£100-200) aim to protect you from any plans or requirements by local councils that could affect the value of your property. They will include planning permission compliance, future road-building plans, and any Tree Preservation or Compulsory Purchase orders. An exact quote from your conveyancer will rely on the correct postcode - without this you will only get an estimate.
Drainage Search (£30-50) ensures utility companies confirm that the property is connected to the drains, both for fresh water and sewage. If the property has a septic tank (common in some rural areas) you should ask the current owner to pay to have this emptied shortly before completion.
Environmental Searches (£30-60) will check historic use of the land around the property to assess environmental risks. Landfill sites may present a higher subsidence risk. Former industrial land may not suit keen gardeners. Surprisingly, you can be liable for future clear up costs for historic contamination. Flood risk is particularly important to check given recent climate events, and may significantly increase your insurance premiums.
Chancel Liability Check (£10-20) checks for the applicability of archaic rules whereby property and land owners may bear responsibility to contribute to the upkeep of the 'Chancel' (technically the choir stall & altar of any local medieval church!). Local searches will not reveal such liabilities. The Church Commissioners' right to claim these monies should expire by 2013. Some solicitors now believe it is faster, cheaper and easier to buy an indemnity to insure against any financial risk than to undertake these searches.
Local Searches/ Plan Searches (£40-300) are location-specific searches covering issues excluded from local authority searches concerning land in the vicinity of the property. They can cover issues such as changes in delivery volumes or times to nearby light industrial units. In some parts of the country searches for past, present or future mining activities are necessary. The affected areas are generally obvious, but one or two (such as Bristol city centre!) may surprise you.
Land Registration Fees cover the cost of registering a change of property ownership. These are fixed and tiered according to the property price as follows:
Under £50,000 £50 £50,001 - 80,000 £80 £80,000 - 100,000 £130 £100,001 - 200,000 £200 £200,001 - 500,000 £280 £500,001 - 1,000,000 £550 £1,000,001+ £920
Telegraphic Transfer Fee (£20-40) covers the cost of sending your money to the seller's conveyancer. As a seller you'll pay an equivalent charge for mortgage redemption transfers, though if the funds involved are under £60,000 it is generally possible to use the free BACS system instead.
Bankruptcy Search (£2-5) is a priority search (aka pre-completion search) which is undertaken as a formality for your lender between exchange and completion to check you have not been declared bankrupt.
Land Registry Office copies (£5-10) are another priority search to ensure that your vendor really does own the property you are buying.
Stamp Duty and Land Tax (SDLT) is a tax charged at higher rates according to the property price as follows:
£125,000 - 250,000 1% £250,001 - 500,000 3% £500,001 - 1,000,000 4% £1,000,001+ 5%
The higher rates apply to the entire purchase price, not just the differential tiers. So paying another £1 over £500,000 increases your SDLT costs by an extra £5,000. Strictly speaking ทาวน์เฮ้าส์มือสอง SDLT is a tax not a disbursement. It is included here because payment will be managed by your conveyancer, who should specify the amount due on the agreed sale price. Your conveyancer will submit a Stamp Duty Land Transaction form on your behalf. It's worth checking this cost is included in your original conveyancing quote, as it's one of those items where some firms will seek to charge an additional £50 or so.
Disbursement costs are not optional extras, but necessary preliminaries to buying a new home. As such they should be clearly and separately specified in any reputable conveyancing quote. Use this guide as a checklist to ensure that none are left out. Ask politely for an explanation if the prices are wildly different to the guidelines above.
While the author has made every effort to ensure the accuracy of this information it should be regarded as for guidance only. No liability can be accepted for any inaccuracies.
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