Buying House in UK while still in Oz - advice on process please

[JaneSmith]

Hello again,

 

Is anyone out there able to advise me on the process for buying a house in the UK? Having moved around Oz a bit I've bought and sold homes several times here but the UK process seems pretty different, so I am wondering if anyone experienced in buying homes over there can give me some tips.

 

For example, on Rightmove.co.uk and Zoopla.co.uk it seems as though the agents advertise the lowest acceptable price, rather than a fixed price (ie. the small print usually seems to say "upwards of GBP...." and then if they accept an offer, you have to get a contract on the place double quick or someone might gazump you with a higher price because during that period the agent will advertise the house as "Subject to contract" and identify the price accepted, basically seeking a higher price for someone else.

 

That's pretty anxiety provoking. In Australia, contracts are generally made conditional on a building report being satisfactory and finance coming through, and while that's being confirmed (usually within a set 2 week timeframe), no-one else can put in an offer.

 

So at what point in the process does one get a building survey done in the UK? They're pretty expensive (I understand they're about GBP 500 each) so I'd rather not have to do one prior to an offer being accepted and the place being temporarily off the market. Otherwise I might find I'm paying for numerous building reports for properties that are then purchased by other people. Or if I get the building report done when the house is already under contract, can I get out of the contract without cost, if it states there are a lot of expensive wrong with the property?

 

Is anyone able to give me advice about this?

 

Also, it would suit our circumstances to rent the house out after purchasing, since I'll be buying the house well in advance of return (mainly due to the exchange range AUD to GBP going in the wrong direction so the longer I leave it the less house I'll be able to get for the AUD's that are available). Has anyone had much experience of renting property back to sellers? I'm told it isn't all that common in the UK - does anyone know if there are any legal impediments and/or whether it would necessarily make conveyancing a lot more difficult/expensive?

 

I will also have discussions with the conveyancers, but I'm not sure how much advice they give prior to being asked to contract on a specific property, so it would be useful to get some idea from anyone out there experienced in buying homes in the UK.

:confused:

[northshorepom]

Hello again,

 

Is anyone out there able to advise me on the process for buying a house in the UK? Having moved around Oz a bit I've bought and sold homes several times here but the UK process seems pretty different, so I am wondering if anyone experienced in buying homes over there can give me some tips.

 

For example, on Rightmove.co.uk and Zoopla.co.uk it seems as though the agents advertise the lowest acceptable price, rather than a fixed price (ie. the small print usually seems to say "upwards of GBP...."

I think you are probably reading this wrongly. In the main, houses in England and Wales are usually marketed with an "asking price". This is usually at the top end of what the vendor hopes/expects to get. In a strong market, houses will go for the asking price and (very) occasionally even more especially if more than one party gets in a bidding war

 

You view the house and make an offer through the estate agent. That offer is either accepted or rejected. If they accept it then it is normal to ask (and expect) them to stop actively marketing it. That means their estate agent should say it is "sold, subject to contract" and it should be marked as such on websites. Their estate agent should also stop making appointments for others to view.

 

After agreeing the price, you then get your surveys done and appoint a solicitor/conveyancer to do the legal work.

 

However, here is the important bit: Nothing is legally binding on either party until you exchange contracts. Actually getting to the point of exchanging contracts means you must have done your surveys, searches (through the solicitor, for rights of way and the like over the land), have drafted and agreed the contract between your solicitor and the vendor's solicitor, and if there is finance required, your lender will have to be satisfied as well. This all takes some time to arrange, 2-3 months as a minimum.

 

At any time up to exchange of contracts, you can pull out with no penalty.....but so can the vendor. This is where the opportunity comes in for unscrupulous vendors to seek/invite higher offers and accept one of them (gazumping) and pull out of the deal with you, and where the opportunity comes in for unscrupulous buyers to have more than one iron in the fire and pull out of the deal(s) they fancy less, or to receive the survey and pick on something that's been picked up and try and knock something off the previously agreed price. Neither of you have any protection against people doing this

 

To add grist to the mill, most people need to sell a house to buy another and so you frequently get in a chain where there are 3,4+ linked transactions, all of which have to resolve these potential issues because in almost all circumstances every transaction will have to exchange contracts simultaneously, ie on the same day, with the same completion date agreed. Otherwise someone could be left with a commitment to spend 300K they haven't got until they've sold their houses. Bridging loans to get past this are available but are expensive and are not the norm

 

This isn't as complicated as it sounds, but it does mean the buying/selling process is protracted between agreeing a price and actually doing the deal, and deals often fall over.

 

This can work to your advantage in some ways - if you are a chain-free buyer (as you should be, coming from overseas) then you are attractive to sellers as the likelihood of the deal falling over because of your end of the chain is removed. Likewise buyers with cash (no lender) are very attractive. Sellers have to weigh up the risk of the deal being completed as well as just the price offered.

 

So when you do make an offer, make sure you lay it on real thick with the agent about the strength of your position and offer if it's not contingent on others. It will help

 

 

and then if they accept an offer, you have to get a contract on the place double quick or someone might gazump you with a higher price because during that period the agent will advertise the house as "Subject to contract" and identify the price accepted, basically seeking a higher price for someone else.

The agent won't identify the price accepted or keep marketing it, if they have any professionalism - I think the code of conduct of their industry body prevents it. But there is nothing legally to stop an eager buyer contacting the vendors themselves or sticking a high offer in to the agent.

 

That's pretty anxiety provoking. In Australia, contracts are generally made conditional on a building report being satisfactory and finance coming through, and while that's being confirmed (usually within a set 2 week timeframe), no-one else can put in an offer.

It can be anxiety provoking, yes

 

So at what point in the process does one get a building survey done in the UK? They're pretty expensive (I understand they're about GBP 500 each) so I'd rather not have to do one prior to an offer being accepted and the place being temporarily off the market. Otherwise I might find I'm paying for numerous building reports for properties that are then purchased by other people. Or if I get the building report done when the house is already under contract, can I get out of the contract without cost, if it states there are a lot of expensive wrong with the property?

You agree a price and then get the survey done. Typically surveys come in 3 different types: Valuation (the most basic, this tells you almost nothing about the condition and is purely to cover the lender's risk of lending on a bad house), Homebuyer's report (tells you condition from a visual inspection as well) and Full Structural (a proper survey done by a chartered surveyor which should be able to be relied on). These are in ascending order of cost. The choice of which to go for depends on risk but it's up to you (unless the lender insists on a particular type). For an old house you'd be well advised getting a more comprehensive survey

 

Is anyone able to give me advice about this?

 

Also, it would suit our circumstances to rent the house out after purchasing, since I'll be buying the house well in advance of return (mainly due to the exchange range AUD to GBP going in the wrong direction so the longer I leave it the less house I'll be able to get for the AUD's that are available). Has anyone had much experience of renting property back to sellers? I'm told it isn't all that common in the UK - does anyone know if there are any legal impediments and/or whether it would necessarily make conveyancing a lot more difficult/expensive?

This is usually made difficult/impossible by the lenders. Lenders want to lend to people who live in the property, lending to landlords is higher risk for them so it costs you more, if you can get finance. If you are buying from overseas and trying to do this, I think you would find it very difficult if not impossible to get finance. You don't say if you need it or not. I am assuming not from a baseline, because again without any UK background you'd be unlikely to get finance anyway

 

 

I will also have discussions with the conveyancers, but I'm not sure how much advice they give prior to being asked to contract on a specific property, so it would be useful to get some idea from anyone out there experienced in buying homes in the UK.

:confused:

The other stumbling block is buying from overseas at all, with money laundering regulations which are now very tight around positive identification of customers. Solicitors will have to positively ID you for a start. It can be done but it would usually be done through some sort of local agent. Try getting in touch with a big name conveyancing solicitor and asking what the process might be.

[patsmb]

To be honest I think the buying and selling process in the UK is a nightmare compared to Oz

Contracts are not exchanged until ,normally, a week before settlement

We "sold " in June 2001 but the contract did not go through until September after many discussions and headaches to say the least

Had a friend recently sold in March moved out in May but did not get into her new home until October because of complications with the chain she was in

ONe problem we encountered was our buyers solicitor was not based in our home town and flatly refused to sign off of our buyers mortgage because of a right of way over council land to get onto our drive

i found the caveat in the land registry paid around 3 quid to down load it and things began to move then albeit slowly !

[Rupert]

Hello again,

 

Is anyone out there able to advise me on the process for buying a house in the UK? Having moved around Oz a bit I've bought and sold homes several times here but the UK process seems pretty different, so I am wondering if anyone experienced in buying homes over there can give me some tips.

 

For example, on Rightmove.co.uk and Zoopla.co.uk it seems as though the agents advertise the lowest acceptable price, rather than a fixed price (ie. the small print usually seems to say "upwards of GBP...." and then if they accept an offer, you have to get a contract on the place double quick or someone might gazump you with a higher price because during that period the agent will advertise the house as "Subject to contract" and identify the price accepted, basically seeking a higher price for someone else.

 

That's pretty anxiety provoking. In Australia, contracts are generally made conditional on a building report being satisfactory and finance coming through, and while that's being confirmed (usually within a set 2 week timeframe), no-one else can put in an offer.

 

So at what point in the process does one get a building survey done in the UK? They're pretty expensive (I understand they're about GBP 500 each) so I'd rather not have to do one prior to an offer being accepted and the place being temporarily off the market. Otherwise I might find I'm paying for numerous building reports for properties that are then purchased by other people. Or if I get the building report done when the house is already under contract, can I get out of the contract without cost, if it states there are a lot of expensive wrong with the property?

 

Is anyone able to give me advice about this?

 

Also, it would suit our circumstances to rent the house out after purchasing, since I'll be buying the house well in advance of return (mainly due to the exchange range AUD to GBP going in the wrong direction so the longer I leave it the less house I'll be able to get for the AUD's that are available). Has anyone had much experience of renting property back to sellers? I'm told it isn't all that common in the UK - does anyone know if there are any legal impediments and/or whether it would necessarily make conveyancing a lot more difficult/expensive?

 

I will also have discussions with the conveyancers, but I'm not sure how much advice they give prior to being asked to contract on a specific property, so it would be useful to get some idea from anyone out there experienced in buying homes in the UK.

:confused:

 

No the advertised price is not the lowest acceptable price, in fact it is usually the opposite. In most markets, most sellers would be very happy to get the advertised price. A seller would only get more than asking price in a very buoyant sellers market, something the UK has not seen for a little while.

 

If you like the house you "make an offer", negotiate and hopefully you would get the offer accepted. At this point, it is normal to agree a marketing freeze with the buyer, you agree to progress what you need to do and they agree not to actively market the property anymore. They will of course want to see that you are progressing with your survey and mortgage offer of course. If another offer is received at any time during the process, the agent is legally obliged to pass that offer onto the seller. That is an unavoidable risk.

 

Once the survey and all the legalities are done then you exchange contracts and at this point you would agree a completion date, which is usually a couple of weeks in advance, but could be more if all parties agree. Last time we bought, we agreed to complete a month after exchange.

 

I have had a sale fall through once, it meant I lost the property I was buying too, so was pretty expensive business. Lost a few grand, just on the whim of my purchaser who pulled out.

[Guest]

Basically is a better way to buy a house in the UK and gazumping doesnt happen much, especially now.

 

However you will have to deal with the scum of the earth which is an estate agent as you do in Oz. i prefer a parking attendant to an estate agent....

[boganbear]

Unless you are 100% cash buyer you will probably not be able to get a mortgage if you are outside the UK. I would certainly not buy a property without seeing it myself and keeping a very beady eye on the estate agent!

 

Just wait until you get to the UK to buy somewhere. Don't forget that renting is different in the Uk to Australia and you cannot offset maintenance expenses against rental income or negatively gear it.

[byrned]

Somebody told me you can get ex-pat mortgages try HSBC or Nat-west that is if you need a mortgage.

[Rupert]

Unless you are 100% cash buyer you will probably not be able to get a mortgage if you are outside the UK. I would certainly not buy a property without seeing it myself and keeping a very beady eye on the estate agent!

 

Just wait until you get to the UK to buy somewhere. Don't forget that renting is different in the Uk to Australia and you cannot offset maintenance expenses against rental income or negatively gear it.

 

If you were a 100% cash buyer why would you be looking for a mortgage. :biggrin:

 

OP I have to agree with boganbear it would make much more sense to wait until you are coming back than to buy and rent out. If you are worried about the exchange rate then just sent your money back now and let it sit in an account.

[Guest]

Unless you are 100% cash buyer you will probably not be able to get a mortgage if you are outside the UK. I would certainly not buy a property without seeing it myself and keeping a very beady eye on the estate agent!

 

Just wait until you get to the UK to buy somewhere. Don't forget that renting is different in the Uk to Australia and you cannot offset maintenance expenses against rental income or negatively gear it.

 

As a landlord you absolutely can off-set maintenance charges against rental income - you keep accounts like any business and only pay tax on the profit. Mortgage interest is also part of your costs and also offset against rental income, it the total cost of the mortgage interest, maintenance and any other related costs is greater than the income then there is no profit and no tax. If you make a loss on a property but have other income i.e. from employment or other business interests then that loss is offset against the other income - i.e what the Aussies call 'negative gearing'. The one thing that I believe is different is depreciation, I am not aware in the UK that you can claim this other than on furnished properties - we perceive houses as long lasting in the UK I will be looking into it though once we rent our house out again.

 

As for not being able to get a mortgage, there are 'ex-pat' mortgages - I know little about them and only heard of them after we moved back. I'm actually wishing I'd known sooner as they are based on your overseas employment/salary and it would have been easier to get a mortgage on that than on 3 months books in a new business in the UK.

[Guest]

Just to add that as NSP said the process he has described applies to England and Wales and he has described it so well that I have nothing to add. Buying or selling a house in England is VERY stressful especially if you are doing both

 

The law is completely different in Scotland so if by chance that is something of interest let me know and I'll explain what happens there - it is much more like Australia but with some differences.

[JaneSmith]

:biggrin: thanks for your very comprehensive response. On the topic of agents continuing to market a property once an offer is in, here's one example I've come across (not that it's a house I'd want anyway): http://www.zoopla.co.uk/for-sale/details/30592090?search_identifier=fbea63e02c15dacabf3d1a6a5794c2f0. I've found a few conveyancers through a site called reallymoving.com who have agreed to conduct a transaction for me by email etc. I think I'll need to furnish them with certified copies of identification docs closer to the time. Thank you all, you've been very helpful :rolleyes:

[JaneSmith]

Hi, I can't do that (just send the money over to wait), due to the financing arrangements. Also, since I'm bringing children with me I don't want to have to shift them around a lot once we get back to the UK as the move from Oz will be disruptive enough. I'd like to know where we're going to settle beforehand. I came across this blog: http://www.bitesizedthoughts.com/2013/04/purchasing-property-overseas-australia.html Which recommended using a Buying Agent, though they look like quite an expensive option and also don't necessarily operate as far away from central London as I'm having to look (because of the affordability issue). :dull:

[fourcorners]

Just be aware that if you need to get a mortgage, expat mortgages secured on overseas income are quite hard to get. Many banks stopped doing them in about January this year. Even though we already had a mortgage in the UK which we had heavily overpaid, we couldn't draw down on that at all when we wanted to buy another property. We did discover that Barclays were doing expat mortgages but you needed to be borrowing over 100k and have a substantial deposit, plus the rates weren't great.

 

If you are a chain free buyer, as we have been with both of ours, and the property is also chain free, then the process is generally much quicker and relatively stress free. It also means you can negotiate harder on the price as the seller will be more likely to go with you as you'd be chain free. The only stressful part of our first purchase was having to get some mundic testing done, which shouldn't be an issue if you're looking near London.

[janlo]

Unless you are 100% cash buyer you will probably not be able to get a mortgage if you are outside the UK. I would certainly not buy a property without seeing it myself and keeping a very beady eye on the estate agent!

 

Just wait until you get to the UK to buy somewhere. Don't forget that renting is different in the Uk to Australia and you cannot offset maintenance expenses against rental income or negatively gear it.

 

You definately CAN offset maintenance expenses !

[Gbye grey sky]

If you make a loss on a property but have other income i.e. from employment or other business interests then that loss is offset against the other income - i.e what the Aussies call 'negative gearing'.

 

Unless the rules have changed and I missed them this is not the case unless you are in business as a property landlord. Losses on letting a house cannot be offset against other income in the UK but the losses can be carried forward in perpetuity and offset against future letting profits.

 

We are in the opposite position to you in that we are planning to buy a house in Queensland next year in advance of moving over in 2015. We plan on viewing properties when we validate visa and recce. We also do not intend this to be our final property but rather a place we can rent out until we get there and then live in for up to a year while we seek our long term home and then keep it as an investment. This may end up being impractical but it is our plan at the moment.

 

I would caution against buying anything you have never seen at least twice if it is going to be your intended home. Even if you had someone you could trust "on the ground" they would need to know exactly what you were looking for and be prepared to give up a great deal of time on your behalf.

[JaneSmith]

Another quick question for this thread, can anyone explain leasehold to me? I understand it's like being a very long term tenant to a landlord who has the freehold and that leaseholds that still have about 70 or 80 years of a 99 year lease to go are considered pretty good. I've seen a few properties with only relatively short times to go - eg. 15-30 years. The blurb says these leases are renewable. Okay. But how do I find out the price of renewal? I'd want to know that before putting in an offer. For example, a few weeks ago there was a beautiful flat in Sloane Square advertised that only had about 20 years to go on the lease and the flat was advertised at an amazingly affordable price - I'm sure the catch was that lease renewal would be about $2 million which I'd never have access to in a month of Sundays. Does anyone know how to find out about the price of lease renewal?:mask:

[Guest]

With Leasehold you own the property but not the land it sits on or any common areas. It is most common with flats/apartments and is similar to a 'strata' in Australia. You pay an annual fee and the leaseholder takes care on common maintenance, buildings insurance etc. One question to ask is what the annual fee is, in some swanky places with lifts, gyms etc. it could by £1000s a year. The other thing to be mindful of is you can easily get builds for maintenance many times the annual fee - e.g. for painting of common areas, repair of chimney stacks, anything really and this is pretty much out of your control - a bill of £15k wouldn't be uncommon

 

Twenty years ago a lot of unscrupulous leaseholders were fleecing homeowners but the law has been tightened up and a 'right to buy' legislation has resulted in leaseholders being reigned in. Essentially if a certain percentage of the homeowners wish to buy the lease from the leaseholder via a 'residents committee' the leaseholder HAS to sell.

 

I certainly wouldn't be buying a property with a 20 year lease myself, unless you could renew. I don't know if there is a way of actually knowing how much the renewal would be in the future but there is a link here that would give you an idea at current prices

 

https://www.gov.uk/leasehold-property/extending-changing-or-ending-a-lease

 

I have only ever had one leasehold property and it was no problem at all, we bought it with a 99 year lease and there was just two flats on the lease with a small common hall. It cost less than £100 a year and in 15 years we never had any maintenance - we did go halves with the upper flat to relay the driveway but that was done between ourselves - thinking about it now the leaseholder probably should have given permission for the work but he was never consulted!

 

If you are buying a flat you probably don't have a lot of choice, my advice would be 1) don't buy in a gorgeous old building, maintenance costs could bankrupt you, 2) don't buy in a fancy apartment block with lots of shared facilities, the fees could bankrupt you 3) Buying in a block of 2,4 or even 15 is better than a block of 50 where getting any kind of agreement with the fellow homeowners would be almost impossible. 4) Buy a house

[Guest]

Unless the rules have changed and I missed them this is not the case unless you are in business as a property landlord. Losses on letting a house cannot be offset against other income in the UK but the losses can be carried forward in perpetuity and offset against future letting profits.

 

 

 

I am probably wrong

 

My OH had a property development company for a while, he mostly sold properties quickly but one got stuck and after a year of paying a mortgage with no sale we decided to rent it out so in those circumstances I guess that's why the loss was offset as it was within a limited company.

 

You can definitely offset maintenance though - we've rented out many places in the past. Generally in the UK you make a profit as the rent is higher than the mortgage so we have never made a loss to offset!

[Guest]

Personally I'd be less worried about buying a house unseen in the UK than in Australia - certainly in Perth a lot of houses are sold pretty much unfit for habitation because people buy them for land investment, something that just doesn't happen in the UK. There are 'buyers agents' in Australia though and although it would cost, if you are thinking about it it may be worth engaging one (unless of course you have a friend/family member to help)

 

When we sold our house in Perth, the person who bought it never saw it - she was coming from Melbourne!

[JaneSmith]

Thanks for those tips - what is mundic testing though?:rolleyes:

[JaneSmith]

Those are great tips - thanks! :rolleyes:

[Gbye grey sky]

A couple of other considerations are that unfurnished lets are less common in the UK I believe than elsewhere. Also sitting tenants hold a lot of power in the UK so there can be issues when you need them to vacate for you when you make the move. Not being there to physically check the property or verify whether work is really necessary; you have to really trust your agent. These are some of the concerns we have in buying a Queensland property a year before arrival.

[JaneSmith]

:jiggy:Yes, there are some pitfalls with being an absentee landlord...I have to weigh these up with not being able to buy a property due to the AUD continuing to slide. I've come across some firms that provide furniture for hire for rental property to overcome the problem of the place needing to be furnished. Obviously it will reduce the rental income and it wouldn't be affordable for a long-term rental situation. With sitting tenants, to my understanding this is mainly an issue if I were to decide to sell a property with the tenant in situ. http://www.ask.com/question/how-do-you-become-a-sitting-tenant but I wouldn't be planning to do that. Where the tenant is on a lease that clearly states a particular end date and s/he was given the required amount of notice in writing prior to the end of the lease date that lease would not be renewed, then to my understanding the sitting tenant thing would not apply. Obviously if we turned up in the UK before the end of the lease, then we'd have to rent somewhere until their lease date expired and/or request they leave early and pay them compensation for me breaking the lease. That's my current understanding, based on Australian experience. Are there other issues associated with 'sitting tenancies' I've not taken account of. ....Currently it would suit me down to the ground to find a property with a sitting tenant in it I think, but unfortunately I've not come across such in my price range!

[Guest]

It's not quite as straight forward as that to get a tenant out. Regardless of the tenancy agreement and giving the appropriate notice a tenant can simply refuse to move out - in fact it is likely if they cannot find another property they will ADVISED not to move out, otherwise they will be classified as making themselves voluntarily homeless and will not be entitled to assistance. A landlord or a letting agency cannot evict a tenant only a court can.

 

Ultimately you will get the property back but first you will have to go to court for possession and if they still don't move out you then need to get an eviction order.

 

Most of the time of course the tenants simply moves out - ours did but it was a worry!

[JaneSmith]

....it's so complicated trying to move back, which is why I've left it sooooo long....In Australia if there a difficulties with a tenancy there's an Administrative Tribunal that deals with it. It's pretty quick and straightforward, not too expensive for either party and doesn't require a lawyer. Are you telling me that in the UK the same issues have to be dealt with in an actual court and that you have to hire a lawyer? Is it compulsory to hire a lawyer? Do people self-represent in simple matters ? (eg. I'd have thought it would be a pretty simple matter - if the tenant doesn't move out we'd be homeless ourselves!). It certainly sounds like it would be pitfall to offer a low rent to attract a tenant...:nah: