The Conveyancing Blog

Traditionally, developers have often included items such as payment of stamp duty or fixtures and fittings such as carpets and curtains in their final price to new home-owners.

However, as lenders try to tighten up on mortgage fraud and ensure borrowers do not over-borrow against property values, they have imposed a change of rules which mean solicitors must declare any incentives given to home-buyers within the conveyancing process.

“Lenders want to be clear as to the true value of the property and that the value is not artificially inflated,” says Simon Pook, head of residential property at solicitors, Charles Lucas and Marshall. “We must now include paperwork which details any incentives.”

The Council of Mortgage Lenders – which has introduced the new ruling – believe the price of newly built homes is often distorted by incentives offered by developers.

They want to ensure that future mortgage offers are based on realistic prices of new property.

“This is just another indication of how tough it is to get mortgages in the current climate and how lenders are trying to tighten up every loophole possible to protect their interests,” added Simon Pook.

For more information contact Simon Pook on 01635 521212 or simon.pook@clmlaw.co.uk

I read a horror story recently written by a lady who had entrusted the conveyancing aspect of her house move to a bulk conveyancer. An already stressful situation became much worse thanks to the actions and sometimes inactions of the bulk conveyancer.

The first and probably the biggest lesson to be learnt from the whole sorry experience is that when buying a service you must be very careful indeed. When buying a product such as a specific make and model of washing machine, to an extent you can go to any electrical store and buy that product and it will be identical to that sold by other stores. This is not the case when purchasing a service.

This applies to all professional services whether it be doctors, dentists, accountants or, indeed, solicitors. There are good ones and bad ones in all professions.

In this particular case, the lady in question ignored her Estate Agent’s advice (and she spoke very highly of the Estate Agents in her article) to use one of 2 local solicitors, and she chose to use the bulk conveyancer, partly because they were “slightly cheaper than the local chap”. I am not saying that all bulk conveyancers are bad; there are good ones and bad ones just like solicitors.

Turning to some of the specific problems that she faced, I can say that she would not have faced them had she instructed my firm. For example, her bulk conveyancer was very slow to respond to e-mails and apparently seemed to set her telephone permanently on divert. We pride ourselves here that we answer e-mails as quickly as possible. Sometimes some research is involved before being able to reply but, nevertheless, they are answered quickly. Our telephone divert system is largely controlled by our calendars so that it switches automatically to divert should the conveyancer be in a meeting or out of the office. There is, of course, a manual facility to divert but that is only used when peace and quite is required when, for example, going through a lengthy legal document.

The bulk conveyancer insisted on communicating with everyone by post, even during the recent postal strike. We have been using e-mails as a matter of course for some years wherever possible. Obviously, if there are substantial enclosures then a letter is still more appropriate, although especially in the postal strike we have been sending some fairly bulky attachments with our e-mails to get round the problem.

An issue over an entry on a search was apparently resolved by the lady in question and the person selling the property before the conveyancer’s letter had even reached the other side’s solicitor! There are other issues with unreturned telephone calls and e-mails that were ignored but the final straw came when she found out that her conveyancer had left the firm without anyone from the firm informing her. All in all, it was not a good advert for the profession.

If you are thinking of instructing a professional for a particular service you should ask about the level of service you can expect to receive. For example, with our initial letter we send purchasers a document which sets out how the transaction should proceed, explaining about the draft Contract, searches and how Contracts are exchanged.  It is a policy of our firm to return all telephone calls the same day, if at all possible, or if it transpires it is not possible, then the Client is telephoned by another member of the firm to explain the situation and to reassure them that the call will be returned the following day.

We also have a large enough Team that should any one conveyancer go on holiday or be absent through sickness, then cover is provided by other members of the Team so that your transaction will not be put on hold until your conveyancer returns.

At the end of the day, our very philosophy centers around Client Care. This is borne out by the fact that we send out Client Satisfaction Surveys at the end of each transaction and of those who reply 98% on average say that we are either “good” or “excellent.” On one particular quarter, we were rated as “good” or “excellent” by 100% of those who responded and it was a matter of some personal annoyance to me that it went back to 98% the following quarter!

The moral of the story is that cheapest is rarely the best and that when choosing any service provider you need to enquire about the service itself.

For more information contact Simon Pook on 01635 521212 or simon.pook@clmlaw.co.uk

Equity release mortgages, also called lifetime mortgages, home reversion or home income plans – are a way of releasing cash, whether to buy a new car, pay for home improvements or repairs, or make life more comfortable. Essentially these schemes allow you to borrow money against the value of your home, with the loan being repaid once your home is sold following your death.

Independent financial advice is strongly recommended before proceeding. An independent financial adviser (IFA) will look at your overall finances to see if an equity release mortgage is really the best option for you and help find the right type of scheme. However, your solicitor will also advise you whether the scheme is the best option and whether there are other alternatives.

So what are the criteria necessary to benefit from these schemes? In most cases you will need to be at least 60 years old, have no outstanding mortgage and own a property in a generally reasonable condition.

• They can give a lump sum, or a regular income or both
• If the property is your principal residence, the money released is free of tax, although if the cash is then invested there maybe tax to pay on any income or growth
• No regular repayments (This does not apply to Home Income Plans)
• You do not have to down size or move to a less expensive area to unlock equity
• With reputable schemes, you are guaranteed to be able to live in your home until the day you die
• You may reduce your inheritance tax bills
• The lump sum can be used to pay for care bills without having to sell up

As with all these schemes, there are also disadvantages:

• If you die soon after taking out the equity release plan, you could effectively have “sold” your home, or a share of it, cheap.
• Interest can roll up quickly on the amount loaned so you may not be able to leave something from the sale proceeds to your family even though the lump sum you were lent only seemed a fairly small proportion of the home’s value
• If the scheme provides an annuity, annuity interest rates are very low but get higher the older you are
• In some cases, state benefits may be lost and you may have to pay extra tax

For more information contact Debbie Wason on 01635 521212 or debbie.wason@clmlaw.co.uk

Shared ownership is a scheme intended to help people who cannot afford to buy a home outright. You buy a share of the property and pay rent on the remaining share you do not own. The property will be purchased with the assistance of a housing association.

To qualify for the scheme you would usually need to be in housing need and be unable to afford outright purchase. Priority may be given to existing public sector tenants or those on local authority or housing association waiting lists.

Although you have not bought the property outright you will have the normal rights and responsibilities of a full owner-occupier. The housing association will grant you a lease which sets these out and will include details of your responsibility for repair and for payment of rent and service charge. It will also entitle you to buy further shares in the property and will set out how you can do this.

The share you purchase is funded by a mortgage. Normally applicants buy a 50% share but the higher the share you purchase the less rent you will have to pay.

It is important to give careful thought to the costs and responsibilities of buying your own home. You may want to contact a housing advice centre for guidance or the Citizens Advice Bureau. Your local authority may also be able to help.

Most shared ownership purchases are dealt with through a housing association who are funded by the Housing Corporation or the local authority but some will use their own money.

There are also a number of other types of schemes such as shared ownership offered by a builder on a new development; leasehold schemes for the elderly; self build schemes; Right to Buy which might be acquired by a tenant of a non-charitable housing association; Home-buy for existing council or housing association tenants or those on the housing waiting list where an interest free loan of 25% may be available; and finally certain schemes for people with learning difficulties.

For more information contact Simon Pook on 01635 521212 or simon.pook@clmlaw.co.uk