A Guide to Buying Residential Property

A Guide to Buying Residential Property in England & Wales

Buying a residential property is usually one of the most significant investments a person makes in their lifetime and is generally viewed as a safe long term investment. An understanding of the process can help facilitate a smooth transaction and keep costs down.

Freehold vs Leasehold

There are two types of property in England & Wales: freehold and leasehold.

  • Freehold properties are usually houses. The owner of a freehold property owns the property, the land it sits on and the space above it. While no ground rent or service charge is payable for a freehold property, the maintenance of the building is up to the owner.
  • Leasehold properties are generally flats. A leasehold property is held under a lease which is for a finite period of time and which details the terms of ownership. While the owner of the leasehold owns the flat, the landlord (freeholder) owns the land and building.
  • Ground rent and service charge are usually collected by the landlord in order to pay for the maintenance of the building and land. Leases also generally restrict an owner's ability to carry out works to, or sublease, the property.

The process of buying a property is predominantly the same irrespective of the property type, but the conveyancing process for leasehold transactions can carry an extra layer of complexity. Your conveyancer must review (amongst other things) the length of the lease (80 + years is preferable), any unfair ground rent or service charge provisions and any supplemental documents required to register you as the legal owner of the flat with the landlord.

The process of purchasing residential property

The process of purchasing a residential property in England & Wales will take the following steps:

1. Deciding to Buy and Choosing a Property

In the first instance, you must decide how to fund and structure your purchase and in whose name to register the property.

If you plan to purchase the property with a mortgage, it is useful to speak to either your preferred lender or a mortgage broker who can advise how much money you can borrow, and provide you with a 'decision in principle'.

You must also ensure you have cash available to fund the deposit (usually 10% of the purchase price), which will be due on exchange of contracts.

It is also important to consider how you wish to own the property. Most commonly property is purchased in the names of the purchaser(s), however investors sometimes choose to purchase the property in the name of a limited company. Choosing to purchase the property in a company name can have tax implications so we recommend professional advice is taken before you choose to do so.

Once you have found a property you like, you will make an offer on your chosen property through the estate agent and, if accepted, the agent will circulate a memorandum of sale to the solicitors. The memorandum of sale sets out the property details and the terms of the offer (which are not legally binding until contracts are exchanged).

2. Investigating the Title to the Property

This is an essential stage in the process as the results of your solicitor’s investigations will reveal any defects in title which might prove detrimental to the property’s value or future marketability.

Your solicitor will review all documentation sent by the seller's solicitor, including the title to the property, the lease (if relevant), standard replies to enquiries and any other supporting documents. Your solicitor will also submit ‘searches’ to various public authorities including a local authority search, an environmental search, and a drainage and water search. You should note that the searches can take up to three weeks to be returned to your solicitor which means this stage of the process can be lengthy.

At this stage of the process, it is also recommended that you instruct a surveyor to inspect the physical state of the property and check for any structural defects.

In light of the results of the documents, your solicitor will raise enquiries with the seller’s solicitor to resolve any potential issues. Once all enquiries are answered satisfactorily, your solicitor will report to you on the results of its investigations and summarise their findings.

3. Exchange of Contracts

If you are still happy to proceed, you will be asked to sign the contract, send the 10% deposit to your solicitor, and agree a completion date with the seller.

Both solicitors will then exchange contracts and the 10% deposit will be sent to the seller's solicitor to hold until completion. Exchange marks the point at which the completion date is fixed and both parties are legally bound by the terms of the contract.

After exchange of contracts, important steps are taken by both solicitors in order to effect completion. The legal transfer will be sent to the seller to sign and return. Your solicitor will also request the remaining completion funds (including any funds from the lender) and send you any documents which need to be signed (such as a licence, lease or the transfer).

4. Completion

On the day of completion, your solicitor will send the completion funds to the seller’s solicitors and upon receipt, the seller will date the transfer and confirm completion has taken place. The keys will then be released by the agents and you will be the proud owner of your new property!

Anna Jassani is a Senior Associate, and Jessica Scarlett, an Associate, in the Residential Property team.

Click here to download our brochure in PDF format

Moving to the UK - Everything you need to know

Moving to the UK is an exciting life event whether it be a short-term move for work to explore business prospects or a more permanent relocation with the whole family; the UK offers an eclectic range of options to live, work and learn, from the cityscapes of London to vineyards in the English countryside and historic university towns in-between. Setting up life in a new country can feel daunting too and it can be difficult to know where to start.

Moving to the UK

Moving House - To Do List

Moving house can be an inherently stressful process. The best way to ensure a smooth transaction is to be prepared with all papers and possible issues in advance, so these do not stall the process due to late discovery, and enabling your solicitor and agent to ensure all matters are properly addressed in advance. We have set out below a short checklist, which is not exhaustive, but should assist in initial preparations so that you can hit the ground running once a buyer is found.

A luxury home living space

Read our expert insights into the luxury residential property market

To successfully buy and sell a property, it is important to understand how the market is evolving and changing. Our real estate specialists share their knowledge on the key residential topics and market trends, from SDLT and Capital Gains Tax to creating a lifestyle property or buying a second home abroad.

Read our articles

The Life Cycle of Family Wealth

From growing a business to starting a family or handing over control of that business to the next generation, every individual has their own goals to aspire to. Our Private Wealth lawyers advise our clients throughout this family life cycle, providing the legal advice required for specific transactions such as purchasing a home or selling a business, whilst also advising on the long-term opportunities for succession and estate planning.

Forsters' Private Wealth - The Life Cycle of Family Wealth logo

"Knowing that our clients will be impressed by the service they receive from a nominated solicitor is vital to our long term relationships - the Forsters team repeatedly provide an exemplary service."
Chambers HNW Guide