Lucy Owen, Partner and Head of Resales

As a solicitor specialising in resales shared ownership, pretty much since I qualified some 16 years ago, I have long felt that resales transactions are treated as the uglier, less sexy (as far as conveyancing goes) branch of shared ownership and frankly I’m fed up with it!

New build shared ownership has always been the flagship of affordable housing with its brand new buildings, quirky radiators, and smell of new paint, however resale shared ownership properties have a lot to offer and it’s time for this to be recognised.

Pre-loved shared ownership properties are incredibly varied in the form they come in, thanks to various schemes that have run in the past.  Not only are there relatively new properties, but older, more characterful properties as well, thanks partly to the old do-it-yourself shared ownership scheme (DIYSO scheme) where a housing association would buy a chosen property on the open market and grant a shared ownership lease to the lucky buyer.  Not everyone wants a new build property, and this is where resales really come into their own offering flats and houses of all shapes and sizes including maisonettes and coach houses.

Practically speaking, conveyancing of resale properties is quite different to new build shared ownership properties.  With new build shared ownership properties, once the draft Contract package for one plot is reviewed and any necessary enquiries satisfactorily responded to, this information can be relied on for all the other plots on that new build development and therefore they can move to exchange extremely quickly once the mortgage offer has landed.  However, with resale properties, each set of draft Contract papers are individual to the property and therefore must be considered individually as well.

In addition, management packs (sometimes 2 or 3 different packs from separate providers) have to be obtained together with at least a Local Search from the council, and perhaps other necessary searches according to the area the property is located -these can sometimes take at least a few weeks to issue.  This means that a resale transaction can take 8-10 weeks from the date the draft Contract package is received to exchange, followed by another 1-3 weeks to completion (if there are no unexpected issues), which is a similar timescale to buying on the open market.  In addition, there may be a chain involved as the owner of the shared ownership property may be buying another shared ownership property or they are buying on the open market.

I appreciate this timescale may put some buyers off resale properties, but really it makes the conveyancing process as individual as the property they are purchasing.  As resale properties are generally a bit older, they have their own sense of character.

Personally, I feel there is also the benefit that you are buying a property that already exists.  Often new build properties are sold off plan i.e., they haven’t been built yet, however the bonus with resale properties is that you get to view them in person and get a feel for the local area and sense of community.  If you live locally anyway, you may even know someone who lives around there anyway, which is always good for an emergency cup of prosecco…I mean sugar.  Plus, you can move in straightaway, you don’t have to wait for the property to be built!

From this article, I guess you can gather than I am all about the resales. For me they have it all – colourful, sometimes off-beat and just a bit more about them than your average new build.  And the slightly longer conveyancing time makes the wait for the property even more worth it, so if you are after something a bit different, they are definitely worth considering over the many new build developments around.

Repeat after me, “Resales, Resales, Resales”.  New Build, move out the way, we are coming through!

As the UK’s largest specialist affordable housing solicitor, we have many clients using Lifetime ISAs and the Help to Buy ISAs to help buy their first home. However, it is useful to know there are some important differences between them, and special rules apply for buying a shared ownership property.

Help to Buy ISA

With a Help to Buy ISA you can save up to £12,000 and if used to buy your first home the government will add a 25% bonus to your savings (maximum £3,000). The Help to Buy ISA closed to new applicants in November 2019, however if you already have an account, you can continue saving up until November 2029.

To qualify for the bonus, the property you buy must be worth £250,000 or less, or up to £450,000 in London. If you are buying through shared ownership (where you buy a percentage share of a property and pay rent on the remaining share) the purchase price is assessed against a 100% share of the property and not the value of the percentage purchased. Your solicitor will need to make a calculation based on the percentage share price and rent payable during the life of the lease to confirm that you qualify.

The bonus is paid on the completion of a house purchase directly to your solicitor, which means that it must be used towards the acquisition of the property.

In order for solicitors to apply for your Help to Buy ISA Bonus, you must close your Help to Buy ISA account and provide them with a copy of the Closing Statement and a completed First Time Buyer Declaration form.

The latest you can claim the government bonus is December 2030. You can also withdraw the money if you are not buying a house, but you wouldn’t receive the bonus.

Lifetime ISA

Lifetime ISAs (LISAs) were launched in April 2017 and are available for UK residents aged between 18 and 39. As with the Help to Buy ISA you are entitled to a 25% government bonus, if it is used to buy your first home or to pay for your retirement at the age of 50.

You can save up to £4,000 each year and the government bonus is applied monthly rather than at the end. You can use the money for your deposit and mortgage, as long as the property is worth £450,000 or less. If you withdraw money for reasons other than buying your first home or for retirement, it is subject to a 25% charge.

As with Help to Buy ISAs, if you are buying a shared ownership property, the price cap applies to the full sale price rather than the share you are buying and your conveyancer will calculate your eligibility for the bonus based on the price paid for the equity share you are buying, plus the net present value of rental payments due over the term of the lease.

All companies that provide LISAs have slightly different ways for you to get your money and claim the bonus. However essentially you will need to complete and return your client declaration to your solicitor with confirmation of when you want the funds for, as it can take up to 30 days to get the funds from a LISA account.

Your solicitor will liaise with your LISA provider and funds will go directly to your solicitor who will hold them until completion.

Things to note

If you have both a Lifetime ISA and a Help to Buy ISA you can only receive a government bonus on one of them, rather than both. However, if you are buying with someone who also has their own Lifetime ISA or Help to Buy ISA, they can use their savings and government bonus as well.

If you have any queries about the ISAs either visit https://www.gov.uk/lifetime-isa, a LISA provider or your solicitor.

Buying a new home is a very exciting time but can also be quite daunting as there is a lot of legal paperwork to sort out and understand.

When you instruct a solicitor to act on your behalf, one of their first jobs, which is required by law, is to verify your identity, and in the case of a purchase, details of your source of funds. This is required by all solicitors as they must comply with the law about money laundering and proceeds of crime, in particular The Proceeds of Crime Act 2002.

The rules are not prescriptive, but all solicitors are required to take reasonable steps to verify where the money you are purchasing your property with is from.  Therefore, you will be asked whether money you are contributing is from your savings, being gifted to you or loaned to you from a third party (separate from your main mortgage lender), and whether any of the monies are from overseas. If so, you will also be asked to supply supporting documentation to prove the source of the money, such as:

1. Money being provided by you from savings

Solicitors will need to see copies of bank statements showing the monies being used for your house deposit.  They will also need to know how this was accrued, for example regular savings, inheritance, property sale, divorce settlement, etc, and will request evidence to support this.

2. Gifts from Third Parties

Solicitors will need to see the original of a letter, addressed to your mortgage lender, which has been signed and dated by the person making the gift confirming information such as the property address the gift is for, the amount of money being gifted, the relationship of the people to you, that the money does not have to be repaid, plus other questions. Evidence of how this gift money was accrued will also be requested, plus copies of bank statements showing the money.

3. Monies being loaned to you

If you are borrowing any monies towards the purchase, in addition to any mortgage, then your solicitor is required to report this to your mortgage lender. It is worth noting that this may affect their decision to lend.

If you do not have a mortgage but are borrowing monies privately, then you will need to provide details of any arrangements that you have agreed with any private lender.

4. Monies coming from abroad

You will need to provide details of any money that is coming from abroad, whether this be your own savings or monies that are being gifted to you, and confirmation of which country it is coming from.  Depending on which country the money is coming from there may be some additional requirements and be prepared to provide translations of bank statements and other documents.

It is possible that your deposit may come from more than one of the above categories, in which case, it is important to provide everything that is relevant for each part.

With regards to proving your personal identity, your solicitor will provide you with a list of documentary evidence that they require, which includes a passport, photocard driving licence, National ID card with photograph or residence permit issued by the Home Office, plus others. You will also be asked to prove your current address with evidence such as recent utility bills, council tax bill for the current year, or a recent mortgage statement.

As well as it being a legal requirement, it is important to remember to satisfy your ID, proof of address and source of funds with your solicitor as soon as possible, as they will be unable to proceed to exchange without them.

When purchasing a shared ownership property (or any property for that matter), you will need to instruct a solicitor to act on your behalf.  It is worth getting a few quotations from different firms for a comparison of costs, but it is important to look beyond the “headline fee” to find out what each solicitor is actually charging for their services. 

What fees should you expect in your quotation?

Legal Fees – this is the fee the solicitor charges for their services. This can differ depending on the purchase price of the property and whether it is leasehold or freehold. A leasehold purchase tends to be charged more as there is more work involved.

Bank Transfer fees – this is a fee for organising the bank transfer of the purchase monies to the seller.

Preparing Stamp Duty Land Tax (SDLT) form – HMRC must be notified about property transactions on a Stamp Duty Land Tax (SDLT) return. This must be within 14 days of the date you complete your purchase, even if you do not owe any tax.  Your solicitor will do this on your behalf and charge a fee for doing so.

Mortgage lender fee – This is the fee a solicitor charges for acting for the mortgage lender.

These are all fees charged by solicitors for various aspects of the work they do for you. Most firms charge for the above items, but the amounts vary from firm to firm, resulting in very different final charges.

Some firms charge other fees for dealing with other aspects and some of the fees charged by a firm of solicitors may not be immediately obvious from their quotation and may be contained in their Terms of Service, so make sure that you get a copy of these before deciding who to instruct.

What about “disbursements”? 

These are expenses payable to third parties as part of the conveyancing transaction. They are paid via your solicitor to the third party; however, they can still vary from firm to firm.

Bankruptcy search fee – this costs £2 per name searched and should be the same irrespective of which firm you instruct.

HM Land Registry Search fee –This is another low-cost search and irrespective of which firm you instruct, the fee payable to the Land Registry will be the same.

Search fees – There are also searches that the solicitor needs to do as part of the conveyancing process, such as local search, flood search, water and drainage search, environmental search and chancel repair search. Depending on which provider a solicitor uses and which searches they choose to do, the amount quoted may vary from firm to firm. The searches are sometimes supplied by the Housing Association’s (HA’s) solicitors at a minimal cost if buying a new build property.

Land Registry registration fee – This is a fee for the registration of your title to the property.  There is a prescribed fee scale, based on the purchase price of the share, plus rent. Irrespective of which firm you instruct, the fee payable to the Land Registry will be the same.

Stamp Duty Land Tax – as this is a tax there is no flexibility here and the rules are the same irrespective of which firm does the conveyancing. The amount is calculated based on factors such as the price of the property, the share being purchased, and whether you are a first-time buyer.

Finally, there are some other things which a buyer of a new build shared ownership property ought to budget for:

1. It is standard practice for the HA’s solicitors to charge certain fees to the buyer. These vary depending on which firm of solicitors the HA uses and at the time of contacting a prospective solicitor for a quotation they will not know the level of those fees.
2. It is possible that there may be further fees payable to a superior landlord or managing agent.
3. HAs generally ask buyers to pay on completion the rent and service charge up to the end of the month of completion and for the whole of the following month. This could amount to paying nearly two months up front if you complete at the beginning of the month.

These expenses will be the same irrespective of which firm of solicitors the buyer instructs as their solicitor has no means of influencing them whatsoever, however many firms fail to mention these items in their quotation and so these costs can come as a nasty surprise.

In conclusion, when looking at quotations, it is important to make sure you read the quote carefully and don’t be afraid to seek clarification.  Be careful of cheap headline fees because often they aren’t as economical as they seem.  There is lots of legal jargon used by solicitors and quotations are often presented in a confusing way with lots of hidden charges.

Although this article focuses on fees, it is worth noting that price is only one factor. Buyers should also consider experience, expertise, recommendation and customer service when choosing their solicitor.