Category: Conveyancing

Gazundering – where a property is sold subject to contract and the buyer makes a new offer before contracts are exchanged to re-negotiate the price downwards at the last moment.

Gazumping – where a property is sold subject to contract and the seller who has already accepted one offer from a buyer, then goes on to accept a higher offer pushing out the first buyer who has spent money on surveys, legal costs and searches they cannot recoup.

Lock-Out Agreement – an agreement between a buyer and a seller granting the buyer exclusive rights to the sale of property for a certain period of time at a certain price.  However, this may involve a payment for the lock out agreement which the buyer may lose if they do not proceed to purchase before the end of the period.

Contract Race – Where a seller has received and accepted two or more offers on a property and will sell the property to the party who is ready to exchange contracts first.  Rules are set by the Law Society, governing such ‘races’.  One party can expend money on legal costs, searches and surveys without winning the race with no redress against the seller.

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Although you may think that you need a local solicitor, i.e. because you need to pop-in to hand over important documentation, the truth is that these days with the power of the internet and our ability to carry out Money Laundering checks online, you can avoid the need for important documents such as Passports and Driving Licences being sent to us via the post. All paperwork can be sent by e-mail, enabling the process to progress as quickly as possible and obviously eliminating the worry of missing post and the inevitable delay that this causes solicitors.

Whilst Aston Bond is known as a leading firm of solicitors in Slough, we often act for clients much further afield than Slough!

What is a buyer with a low deposit to do?

• Buy a second hand property and obtain a 90% mortgage or possibly even a 95% mortgage (if you can get one at a rate of approximately 6%) and hope that property prices do not fall; or
• Buy a new build property from those few property developers who have joined the Government’s NewBuy scheme with a competitively priced mortgage and obtain a 95% mortgage from those lenders who have joined the scheme, such as Barclays, Natwest or Nationwide.

Lenders will lend at market rate as the Government will guarantee lenders from potential losses. The maximum mortgage is £500,000. However, new builds usually carry a premium for being new and as there is less ability to improve and increase the value of the property, the potential to fall into negative equity is much higher. Lenders are protected from losses but the same cannot be said for purchasers. If property prices fall, negative equity is a severe risk and a 5% fall could wipe out a borrower’s investment and the lender could pursue a borrower for the negative equity owed. Nothing related to property is guaranteed to increase in value and buyers, particularly first time buyers, must carefully consider the risks when their deposit is less than 10%, both in terms of higher mortgage rates and in pursuing a new build where the lenders are guaranteed against losses and the property developers are anxious to sell as it makes their properties more attractive.

The legal maxim which covers all property purchases is “Caveat Emptor” (Latin for “let the buyer beware”) and buyers with less than 10% deposit must bear this in mind. Particularly, since stamp duty is now payable at 1% on properties between £125,000 and £250,000 by first time buyers – that is, in addition to the purchase price and any deposit paid.

Most people have the perception that all property transactions drag-on and that it is all about the conveyancers sending out letters and responding in the same fashion. All of which adds weeks to a transaction. We believe that by simply emailing clients and solicitors throughout the process, the whole transaction can be reduced by weeks. For example:

We recently completed a purchase (with a mortgage) within 4 weeks and this was simply because all contact was via email and phone calls.

We also recently received instructions on a sale of a property, mid morning, and were able to email the property information to the client within-the-hour. By the afternoon, the buyer’s solicitors were in possession of a draft contract and copies of the seller’s title.  The next morning, the completed forms were returned and the buyer’s solicitors were in receipt of a complete contract package.

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If you are buying a new build, you should be aware of the new and exciting scheme called the NewBuy scheme which is being supported by the Government.

This new scheme will allow purchasers to buy a new build home with a 95% mortgage, this will of course be a great help to struggling first time buyers who are unable to find the extra 10% or even 15% deposit.

This scheme is available through various builders and is not only open to first time buyers but also existing home owners.

There is a great need for new houses to assist with our ever growing population and we feel this scheme is just what the market needs.

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