Do Your Research
Firstly, it is essential to carry out comprehensive research about the Edinburgh property market. Consider the kind of property you want (e.g., house, flat, new build, period property, etc.), the specific area you’re interested in, the transport links to shops and your place of work, and your maximum budget.
Arrange Your Finances
Before you start the property hunt, understand your financial position. You’ll need to consider how much deposit you can afford, the mortgage amount you can borrow, and how much you can afford to repay each month. To be in the best position of having your offer accepted, ensure you have documentation of your Mortgage in Principle from your mortgage lender. If you are a cash purchaser, in line with UK anti-money laundering regulations, you must be able to show both proof of funds and a trail of how they came about. A Scottish solicitor will only put forward an offer if funds are confirmed.
Choose a Solicitor/Conveyancer
You should choose a solicitor or conveyancer early in the process, preferably one who specialises in Scottish property law and is a member of the Law Society for Scotland, as it differs from English law. They’ll oversee all legal aspects of your purchase. At Ativa Property we work with a number of excellent Scottish conveyancing solicitors and are happy to recommend as required.
Property Search
Once your finances are in order, start your property search. You can do this via property websites, local estate agents, or property auctions. When you find a property you’re interested in, arrange a viewing.
Home Report
When a property is put on the market in Scotland, the seller must provide a Home Report, which includes a Single Survey (condition and valuation), an Energy Report, and a Property Questionnaire. Review these documents carefully and discuss any queries with the selling estate agent.
Making An Offer – Notes of Interest & Closing Dates
If you are very interested in a property, you can ask your solicitor to lodge a ‘Note of Interest’ with the selling estate agent. This means you will be kept informed of any updates or offers on this property. You will also be kept informed of a Closing Date if one is set due to many notes of interest. A Closing Date is when all interested parties of a property are invited to submit official offers, via their solicitor, at a chosen date and time.
If you are very keen to secure a property you can make a direct offer to the selling agent, via your solicitor – this is usually done verbally, initially, until the price/terms are agreed in principal. If accepted, an official offer and terms will be submitted by the solicitor to the selling agent.
What Price to Offer – this depends on market conditions, the property’s condition, location, desirability, levels of interest from other potential buyers and more. Ensure you know the Home Report valuation for the property then take advice from your solicitor as they will know the heat of the market and the average sales prices which are typical for the type of property you are looking at. At the end of the day the price you offer is your decision and if dealing with the selling agent on a one-to-one basis can be negotiated with the seller until both parties are happy. However, where a Closing Date is set you are submitting a blind offer along with other interested parties. It’s worth noting that it’s not always the highest offer that will be accepted by the seller, it depends on a range of terms presented, including things like an acceptable Date of Entry. Discuss these terms with your solicitor to help make your offer as attractive as possible to the seller.
Once your offer has been accepted you will be asked by your solicitor and the selling estate agent to complete some anti-money laundering checks. This includes everyone who is involved in the purchase (who will be on the title deed and who is involved in funding the purchase) – all will need their passport to complete an ID and address check. All those involved in funding the purchase will require to demonstrate Source of Funds – for more information on this CLICK HERE.
The Conveyancing Process
Conveyancing involves the legal transfer of property ownership from the seller to the buyer. In Scotland, this process is different from the rest of the UK and involves the following steps:
- Missives: Your solicitor will send a formal written offer to the seller’s solicitor (via the selling estate agent). The two solicitor parties will then exchange letters, known as ‘missives’, until all conditions are agreed upon between buyer and seller. The conclusion of missives is when a binding contract is formed.
- Searches: Your solicitor will perform legal searches to ensure there are no issues with the property’s title, any planning permissions, any securities held on the property etc.
- Disposition: The seller’s solicitor will prepare the disposition, which transfers ownership of the property from the seller to you.
- Settlement: After signing the disposition, you’ll need to pay the purchase price to the seller’s solicitor. Once they confirm receipt of the funds, you’ll get the keys to your new property.
Property Purchase Taxes in Scotland
The tax to consider when buying a property in Scotland is the Land and Buildings Transaction Tax (LBTT). Your solicitor will file an LBTT return on your behalf and arrange payment of the tax. The amount depends on the property price:
– Up to £145,000 – 0%
– Over £145,000 to £250,000 – 2%
– Over £250,000 to £325,000 – 5%
– Over £325,000 to £750,000 – 10%
– Over £750,000 – 12%
If you’re buying a second home or buy-to-let property, there’s an additional tax known as the Additional Dwelling Supplement (ADS) of 6%, a flat rate on the total price, on top of the LBTT rates.
Note: there is currently a First-Time Buyer relief of 0% up to £175,000 (v £145,000) based on residential property purchase for use as a main residence.
For more detailed information on LBTT and ADS – CLICK HERE
To calculate what you might owe in LBTT use the Revenue Scotland online calculator – CLICK HERE
Registering The Title
After the purchase is complete, your solicitor will register your title in the Land Register of Scotland. There is a fee for this, which your solicitor will include in their costs.
Remember, while this guide provides a general outline, every property purchase is unique, and issues can arise. Therefore, it’s crucial to have a competent and experienced solicitor to guide you through the process.
