7 Mistakes To Avoid While Buying Prime London Property
STEP 1 – PREPARATION
I am not going to pretend that the process of preparation and planning is exciting.
In fact it is remarkably dull. However, the results will be exceptional. Fortunately for you, most buyers do not treat the purchase of a home as a business transaction. Consequently they are ill prepared. You must not make the same mistake. You must be in a position to act swiftly when you find your perfect home. If you are not then it is likely that you will suffer the frustration of losing it to another buyer.
This is down to some very basic preparation:
• Have your finances in place – However you plan to finance the acquisition, you have to ensure your financier is aware of your plans so that he/she can move quickly when asked. As a rule, you will need to put down 5-10% of the purchase price as a deposit on the exchange of contracts. The balance is paid upon “completion”.
It is possible, although rare, to “exchange” within hours of seeing a property.
If you are planning to buy an investment rather than a home there are also ways to reduce the income tax exposure. (But that’s a much more involved topic).
• You must have this organised prior to making an offer otherwise there will be delays. Any unnecessary delays may cause you to lose your ideal home.
The vendor can pull out of the agreement at any time especially if the transaction is taking too long. And this is important, the agreement is not legally binding until contracts have been exchanged. Why take this risk?
• Prepare for SDLT – Stamp Duty Land Tax is payable by the buyer on the purchase of a property. It is currently 4% for transactions over £500,000. The government has recently announced that this will be increased to 5% from 6th April 2011 for transactions over £1m. Again this can be legally avoided although many solicitors do not offer this service. This is simply because it is not their area of expertise. Therefore it is essential that you choose your solicitor carefully.
• Instruct a solicitor – It is essential that you use a solicitor who specialises in London property transactions. You would not rely on a criminal expert to work on a corporate case, so do not instruct a solicitor who is not a property (“conveyancing” is the technical term if you like jargon) specialist. Again they must be available to act as soon as you are ready to make a purchase. Therefore, you should have instructed a solicitor to act for you before you even start looking for a property.
There are money laundering laws which require solicitors to check identifications and the source of funds before a transaction can proceed (this will be more complicated if a specialist structure is being used). Have everything in place so that you can avoid unnecessary delays.
• Instruct a surveyor – In most cases a survey will need to be carried out. You need to have two or three surveyors prepared to act for you at short notice.
• Be available – You may need to view properties at short notice. Obviously this may not always be possible, but if you have people whose opinion you trust, ask them to view properties for you.
STEP 2 – REFINE YOUR PROPERTY CRITERIA
One of the main reasons why buyers waste huge amounts of time is that they are not truly focussed on what they want. If you do not have a clearly defined picture of what you require, you will spend hours looking at unsuitable properties. When we first meet our clients we spend considerable time discussing their requirements to ensure that everything has been considered. You obviously need to know the basics like the number of bedrooms, bathrooms, whether you need a separate dining room, budget, etc. However, you also need to consider:
- • The condition of the property
- • Length of lease
- • Will you require a lift?
- • Views and orientation
- • Architectural styles – both internal and external
- • Service charges
- • Will you require a garage, swimming pool, gym, media room, etc?
One of the most revealing questions we ask is: “What do you want to avoid?” This will help you paint a clearer picture of what you want and therefore reduce the amount of time wasted on viewing unsuitable properties. You will also quickly be able to assess whether your criteria are realistic and modify them accordingly. Too many buyers spend months trying to find “a needle in a haystack” when in fact the needle never existed in the first place.