Buying a House in Scotland
BUYING A HOUSE IN SCOTLANDScotland and England - Not the Same!
For anyone looking to buy property in Scotland it’s important to realise that the Scots have their own unique legal code and it’s quite different from the English system. The most important difference in conveyancing law is the point at which the contract to buy becomes legally binding. When an offer is made on a home in England this does not become legally binding (and incur financial penalties upon withdrawal) until a second step - completion - is undertaken. Completion usually takes place well down the line and close to the envisaged entry date.
Buying in Scotland
However, in Scotland, there is no such second step. Your solicitor completes the contract documents (a series of letters known as ’missives’) within a very short period of the offer being made. Once that offer is accepted the agreement becomes legally binding. If you withdraw you will be held liable for any losses incurred by the other party. The rapid onset of legal obligation helps avoid the practice of ‘gazumping’ which is common in the rest of the UK. A solicitor is required immediately in Scotland as it is s/he who submits the offer on the buyer’s behalf or receive offers on behalf of the seller. Because the legal environment is so different its vital that you hire a Scottish solicitor to represent you.
The Vital Mortgage Offer
In Scotland you need to show confirmation from a mortgage lender that they are prepared to lend you the required sum of money before you can submit a bid on a property. Your offer will simply not be taken seriously without a mortgage offer being made in advance.
The Real Price of Property
Because in Scotland properties are usually marketed on an "offers over" basis you have to view the advertised price as merely a rough guide to what the seller is prepared to accept. In a rising market you should expect to pay around 20% over the indicated price. However in a falling market sellers have been known to accept not only the advertised price but even one slightly lower! Offers usually go to ‘sealed bids’ ie a closing date is set, all offers are considered and the ‘best’ one accepted. Note that you have to bid ’blindly’ ie there’s no way of knowing how much others will bid and it is, therefore, possible that you’ll end up paying well in excess of the next lowest offer! It’s also worth noting that the ‘best’ offer isn’t always the highest. Sellers will also take into account a buyers financial position (are they able to pay?), proposed entry dates and any conditions imposed by the buyer as part of the offer.
Fixed Price
You may see properties described as 'fixed price' when looking through the Edinburgh property pages. This means the seller is not looking for a competitive situation but has already decided on an acceptable price for the property and the first person to offer this will get it. The obvious advantages to the buyer are that you know what you will have to pay for the property, you can be reasonably certain of getting it and you are less likely to incur ’wasted costs’ (see below).
Conditional Offers
The main condition buyers attach to their offers is that they be ‘subject to survey’. This effectively means that the offer is conditional on the survey not throwing up anything of substantial concern. Sellers don’t usually like ‘subject to survey’ offers as it offers a legal opportunity for the buyer to avoid or postpone the buying obligation. Therefore the seller may impose a time-limit on when the survey should be completed by e.g. 24-36 hours.
Note Your Interest!
If you’ve seen a house you love but are not yet in a position to offer you can ask the estate agent to ’note your interest’. Basically this means that they should let you know of any closing dates for offers so that you can make a formal offer at that point if you wish to. Also if someone else makes an offer in the meantime you may be given the opportunity to put in a competing offer. At this point a closing date may be fixed and all interested parties notified. Increasingly, however, these conventions are not being upheld and properties may be sold direct to buyers who make an acceptable offer without setting a formal closing date.
The Entry Date
Once the buyer has decided how much they want to offer, the solicitor will submit a bid on their behalf which will also include a proposed Date of Entry. Specifying the exact entry date means that both parties are aiming toward a mutually agreed deadline. Neither party can delay this once the offer becomes binding without incurring financial penalties. In practice this is a good thing as it helps to stop the formation of that unpredictable and stressful creature known as a property chain! Another reason why chains are less common in Scotland is that offers are not usually accepted that are conditional on the sale of another property.
Time to Pay Up
It is at the date of entry that the full purchase price is generally payable. While it is possible that you’ll be asked for a deposit upfront at an earlier stage, this tends to happen more often when purchasing a new home.
When the purchase price is paid your solicitor will go over the title deeds which are supplied by the seller’s solicitor and if all is well s/he’ll prepare a ’disposition’ which is basically the document which transfers the ownership of that property from the seller to you. He or she will also let you know of any title conditions which are relevant to the property you’ve purchased.
Wasted Costs
Although the Scottish house-buying system can be quicker and, in many cases, much more straightforward than the English, buyers are often forced to spend large sums of money on survey fees before they can offer on a property. So if their offer is unsuccessful, that money is forfeit. Some buyers can end up spending many hundreds or even thousands of pounds before they successfully buy a property.
Have Your Say
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