Buying FAQs – Part 2

The process of buying a property can understandably feel daunting, given the myriad of factors and elements to take into account. To aid in this process, we’ve compiled a detailed guide that addresses the most frequently asked questions we receive. Whether you’re a novice buyer wondering about mortgages or a seasoned investor seeking to expand your portfolio, we aim to address your specific concerns and break down the key steps involved in an approachable way.

What are the tax liabilities associated with purchasing and owning a house in the UK?

There are two main forms of taxes you need to consider in the UK:

  • Purchase Tax: Stamp Duty Land Tax (SDLT) is payable when acquiring a property. 
  • Ownership Tax: If you reside in the property you own, you are obligated to pay Council Tax. This local tax varies depending on your location, with charges typically between £1,100 – £3,000 annually. Students are exempt from this tax. For rental properties, the tenant is responsible for paying the Council Tax.

What is stamp duty? What is the cost and when is it due?

Stamp Duty Land Tax (SDLT), commonly known as stamp duty, is a tax required when purchasing a home or land in England, Wales, and Northern Ireland. 

This tax must be submitted to the tax office by a designated solicitor within 30 days of finalizing the purchase. For more information, please refer to: UK Stamp Tax Policy.

What are the costs involved in purchasing a house and what charges are applicable upon moving in?

When you purchase a house, there are several fees extra costs to consider:

  • Solicitor’s Fee: This is usually based on the total cost of the house and typically ranges from £1,500 – £3,500, excluding a 20% VAT.
  • Additional Expenses: These include costs like home survey and registration fees, which generally amount to about £1,000. Detailed payment information will be provided by the Law Society.

Note: Buying a home with Allie Home does not require any agency fees.

What charges are applicable upon moving into a property?

  • Service Charge: The cost is determined by the amenities, service quality, and location of the property. These charges are calculated annually, per square foot.
  • Ground Rent: This fee varies based on the specific unit, but it typically ranges from £350 to £800 per year. There are currently no ground rent charges for brand new homes. 

How should one handle rental and property management after acquiring a property?

You can instruct Allie Home as your representative even before your property is fully completed. We provide a one-stop service, acting on your behalf in matters ranging from property handover and furniture acquisition to tenant sourcing.

What is the process for selling a property and what costs and taxes are involved?

In the UK, you can either sell your property yourself or hire an agent to find a potential buyer. However, the transaction process must be handled by solicitors. The expenses associated with selling a property include:

  • Agent’s Fees: Typically ranging from 1.5% to 3.0% of the property’s total price.
  • Legal Fees: These depend on the selling and asking price, usually between £1,500 – £3,500, excluding a 20% VAT.
  • Capital Gains Tax: This applies only to the profit made from the sale of investment properties, typically 18% of the net gain. If you are selling your primary residence, you are not required to pay capital gains tax.

Is it necessary to engage an agency when buying a house in the UK?

The agency offers services such as: recommending properties, scheduling property tours, negotiating for the best price, aiding throughout the buying process, recommending solicitors and mortgage banks, conducting property inspections, and providing after-sales services like furniture setup. 

The seller’s service is typically limited to the sale of the property, and post-handover issues are usually not covered by them. 

Importantly, Allie Home does not charge buyers any fees. The purchase price you secure can often be more favorable if you choose to work with Allie Home.

What does a conveyancing solicitor do?

A conveyancing solicitor plays a pivotal role in the legal process of buying and selling of property in the UK. Their responsibilities encompass a wide range of legal activities aimed at ensuring a smooth, legally sound transfer of property ownership. This legal work includes conducting thorough searches to uncover any legal impediments, local authority queries, environmental concerns, or planning issues that could affect the property.

They also handle the drafting and reviewing of contracts, manage the exchange of contracts, and oversee the final completion of the sale or purchase, which involves transferring the funds and securing the new property with title and deeds.

Additionally, conveyancing solicitors offer essential legal advice, clarify complex legal jargon, and ensure that their clients meet all legal obligations and are protected from potential legal disputes.

Their expertise is indispensable in navigating the intricacies of property transactions, making them a critical ally in the buying or selling process.