New Year; New Home? A First Time Buyer’s Guide
Getting Started
As a first-time buyer in Scotland, solid preparation and ground work is key to a successful (and enjoyable!) property search.
First, and most important, you should contact and instruct a solicitor as early as possible to avoid any potential delays and disappointments when you see your dream home. It can take a little time to run through initial compliance procedures, so it is best to get this ticked off as soon as you can.
It is also essential to take time to determine a realistic budget, factoring in not just the property price but also associated costs like taxes, legal fees, outlays, and potential renovations. For most first-time buyers, a mortgage will be required, and it is therefore also important to contact a broker early in the process. This will allow you to obtain a Mortgage Agreement in Principle and establish the likely lending that will be available to you. You should note that lenders will provide loan funds based on the Home Report valuation of the property, which can catch out many first-time buyers. This means that anything offered above the valuation will be coming straight out of your own pocket.
This will then also allow you to focus your search on suitable areas within your budget so that you can begin targeting your viewings and efforts on relevant properties. Viewings are essential (in fact, most sellers will not even entertain an Offer if you have not viewed), so be sure to make the most of your time looking around the property as, once your Offer is accepted, you will not normally be permitted to visit again until after missives are concluded much further down the line (and sometimes very close to the Date of Entry).
The Scottish Property Market
The Scottish property market operates differently from other parts of the UK. Properties are generally marketed with an “Offers Over” price and, in popular areas, it is extremely likely that the selling price will exceed the listed price. Your solicitor will be able to give you a steer on how the market in your chosen area has been performing but, ultimately, the decision on how much you should offer will be down to you.
If you find a property that you are interested in, your first port of call would usually be to contact your solicitor for them to “note interest” on your behalf. This is not binding and just provides your and your solicitor’s details to the selling agents so that they can keep you updated as and when a Closing Date is set. Closing Dates are usually set for popular properties after a couple of notes of interest have been received – this will set a time and date on which interested parties put forward their best and final offers for the property. It is not always the highest value Offer that will be accepted, as your buying position will also be taken into account (many sellers prefer first-time buyers that are not subject to the sale of another property, for example).
Not all properties will go to a Closing Date, however, and in these cases you are free to negotiate an Offer via your solicitor and the selling agents as and when you feel comfortable submitting an Offer. This can involve counter-offers and back-and-forth between both parties until agreement is reached.
Alternatively, some properties may be marketed as “Fixed Price”, and if you are interested in a property like this then it is very important to act quickly and contact your solicitor as soon as possible. It will usually be the first Offer at that value that will be accepted.
With properties on the open market in Scotland, the seller is required to provide a Home Report that should be made available to prospective buyers. This is includes a survey, energy performance certificate and property questionnaire, and you should take significant time reviewing this before deciding if you wish to proceed with an Offer. It may highlight areas which you may wish to have investigated further (such as potential issues with the roof, damp, rot, etc.) and may need to be included as a condition in your formal Offer prepared by your solicitor. If you have any concerns on any aspect of the Home Report, your solicitor will be able to assist.
After an Offer is Accepted
So you now have your Offer accepted, congratulations! Now what?
This is when the legal process of buying the property known as “conveyancing” really begins. If you require a mortgage, it is at this point that you contact your broker or whoever is arranging your mortgage and they will submit the full loan application. Timescales can vary greatly depending on the lender, and also your specific circumstances, but, generally, you could be looking at around six weeks until the loan application is approved and papers are issued to your solicitor.
A “Date of Entry” will likely be proposed once the offer is verbally agreed, which will be the date the purchase legally completes and the keys are handed over in exchange for the price. Timescales can vary depending on your circumstances / the seller’s circumstances / and the complexity of the transaction, but generally if a loan is involved, you will be looking at around eight weeks from the date of acceptance of the Offer until the purchase completes.
In the meantime, your solicitor will be dealing with the “missives” (i.e the contract) and reviewing the various searches, title deeds, and other property related papers for your purchase, and reporting on these to you. This is the main chunk of the purchase transaction and may take your solicitor a little time to conduct their full examination to ensure that you will be receiving good title to the property.
Once the legal aspects are all tied up, your solicitor will deal with drawing down loan funds on your behalf (if required) and ingathering the balance from you. The purchase will complete on the agreed Date of Entry and at this point ownership will transfer and you will be provided the keys in exchange for your solicitor transferring over the full purchase price to the selling agents. Your solicitor will then also deal with any tax returns / payment of tax / registration of deeds on your behalf after the purchase has completed.
Conclusion
Becoming a first-time homeowner is one of the most significant and exciting times of many people’s lives, and choosing the right solicitor to guide you through the process is essential. If you are hoping to begin your property journey this year, please do not hesitate to get in touch for more information and to request a tailored fixed fee quote for your specific circumstances.
