For those who may not be familiar with the process, here is a summary of the differences between house buying in England and Wales (Conveyancing) and house buying in Scotland (Solicitor in Scotland).
When buying a house in England and Wales, the person signing the contract must arrange a conveyancing solicitor. This is the person who sells the home or their agent. If the property is being purchased with someone else, for example, a couple buying a house together, it is up to the first person to sign the contract to arrange conveyancing. If the first person does not want to do this, it is up to the second person to find and arrange a conveyancer.
In Scotland, anyone buying a house must use a solicitor, and the seller pays for the work. There is no equivalent of a conveyancing solicitor in Scotland.
Let's explore conveyancing even more. You can use this article to demystify conveyancing quotes and terms, just like disbursements. Here's what you need to know:
What are Disbursements?
When someone buys a house in England and Wales, they must pay a 3% fee to HM Land Registry. This is called an 'accelerated fee', and it is not optional - it is included in the legal costs of buying the house. The same is true in Scotland. If the buyer is a company or another body, the fee must be paid by the person signing the contract, even if they are not the company's beneficial owner. This fee is not a disbursement.
Disbursements are the fees you need to pay the conveyancer to cover the cost of their work. You can incur many disbursements, so here's a list of the main ones to help you demystify conveyancing quotes in the same way that you might demystify conveyancing in general.
How Do Disbursements Work?
Disbursements are fees separate from the legal costs of buying the house. They are paid to a conveyancer, who is not the contract lawyer. Disbursements cover the costs of any additional work required, not just for purchasing the house.
For example, if you are buying a house that involves a lot of refurbishment or repair. In that case, you may need the assistance of an electrician or other person to ensure the work is carried out to a satisfactory standard.
If you are buying a house in a big city, you may need to pay for an extra surveyor to look at the home. This is because there could be a risk of subsidence, so you will need a specialist to ensure that you are aware of any potential problems.
What is it For?
To buy a house in England, you must have a 'local search'. This is to ensure that there is no former planning permission on the property, that will mean you will not be able to live there legally.
In Scotland, local searches are optional and not part of the conveyancing process. However, you can still choose to have one, for example, if the house is in a conservation area.
Drainage, Water, Environmental, and Coal
You may need to pay for a drainage survey before buying a house. This can be a necessary disbursement to look out for when buying a home, as it is an area you may want to check up on. This is especially important if you are buying a house in a rural area because it could be an expensive problem.
The same applies if you buy a house in a part of England that is not connected to the main water supply. If the house is not connected to a water main.
It's also possible that the house you are purchasing could be in a contaminated area. If it is, you could pay to have the area decontaminated to ensure it is safe.
This is a necessary disbursement to watch out for. You will have to have a bankruptcy search if anyone selling the house has a bankruptcy against their name. It is also possible that you will need to have a bankruptcy search done on the person who is buying the home.
You will be shown the bankruptcy details when you have a bankruptcy search. This means that the person you are buying the house from will not know that you had the search done.
Stamp Duty Land Tax (SDLT)
This is a tax that you will have to pay if you buy a house in England or Wales. The amount you have to pay depends on the house's price, so that the amount may vary.
Stamp Duty Land Tax doesn't apply to Scotland. However, you may still have to pay other taxes, for example, Land & Buildings Transaction Tax (LBTT) or Land Transaction Tax (LTT). This will depend on the area that you are buying the house in. If the area has one of the taxes above, you will probably have to pay it, even if you are buying a home in England or Wales.
Land Registry Registration Fees
You need to pay these costs to register the house at the Land Registry. HM Land Registry is part of the HM Revenue & Customs, and it keeps a record of all the houses that have been bought and sold.
Registering your house when you purchase it is a process you will have to go through after the conveyancing work has been completed.
Money Transfer Fees
With all the money that is required to be transferred over to pay for the purchase of a house, it is common for fees to be involved. These are also known as FX fees, and they are fees that you pay to a bank to transfer money to someone else.
In the case of a house purchase, the fees will be involved when transferring money to the person selling the house.
This can be an important fee to keep an eye on. The reason is that it can potentially mean you pay more in fees than the amount you are transferring. If you buy a house in a foreign currency, you will also have to factor in the exchange rate.
It is also worth noting that a bank may charge other fees, such as transferring money for a mortgage.
The Bottom Line
Disbursements are fees for additional work that needs to be done, and in the case of a house purchase, these include local searches, drainage surveys, and bankruptcy searches. If you are buying a house in Scotland, the seller is responsible for these fees, not you.
These fees are a good example of why you should be sure to research how much a conveyancing quote should cost before you accept it.
If you need to find conveyancing quotes in the UK, we’re here to help you. Conveyancing Calculator is an online residential conveyancing calculator. We use our trust and accurate conveyancing fees calculator to ensure you get the best idea of the costs you are facing. Browse through our website for more information.