The conveyancing process can be daunting to the uninitiated. There are so many elements to consider that it is impossible to do it without any help. Navigating the fees, for starters, can be a challenge. While there are plenty of online conveyancing calculators out there, there will likely be a difference between that estimate and real life.
Understanding each fee and payment you need to make is crucial to the financial success of this process. Whether you are purchasing or selling does not matter; even a basic knowledge of all the fees involved can assuage any apprehensions you may have.
Aside from giving you more confidence in the process, working knowledge of conveyancing will give you the capacity to determine which fees and payments are optional and which are necessary. After all, it would be awful to realise late in the game that you have to spend more than initially planned.
Understanding the difference between a quote and an estimate
A quote, technically and legally speaking, is defined as an offer to do a specific task for that particular fee. Unlike an estimate, more thought usually goes into the quote. In the conveyancing process, this might include a wide range of fees involved in the buying or selling of a real estate property.
The size of the quote often depends on what included fees there are. It might also be determined by the size or quality of the firm. Once the client and lawyer settle on agreeable terms, they can sign a contract that would legally bind them to the document’s stipulated terms.
An estimate, on the other hand, is more like a guess. Depending on the firm, lawyers may provide an estimate instead of a quote under terms of billable hours or payment after delivery of service. The costs of this may be larger or smaller than expected depending on the transaction. This type of agreement places quite a bit of risk on the client, so make sure to consider this carefully.
Understanding fees and disbursements
Disbursements are any third party costs incurred on your behalf by your solicitor. These costs will often be passed to you unless you paid them in advance in your agreement with the solicitor. Your quote should identify clearly which charges are disbursements.
To help you understand your quote better, here are some likely fees and disbursements you will encounter throughout the process:
1 - Legal Fees
Legal fees, which are payments made directly to lawyers for services rendered or requested, differ from firm to firm and from transaction to transaction. Certain solicitors offer premium prices for premium services that incorporate modern technology and entire teams of people to handle the process. Some firms charge lower for possibly slower service.
Experience levels also account for this fee. The more experienced a lawyer is, the more they are likely to charge.
One trend that has grown in UK property law is the No Move, No Fee policy. If your purchase or sale doesn’t proceed, the lawyer may waive their legal fees. Processing fees, taxes, insurance, and so on are excluded; you will likely need to pay for them anyway.
Just make sure to read the fine print of your contract before signing so you can be sure that there are no hidden charges nor dubious stipulations.
2 - The ID Fee
Solicitors are required to verify the identity of all parties involved. Third-party providers usually perform this task, and this only needs to happen once in the process. As such, you should not be charged for both the sale and the purchase. You can expect to pay anywhere from £2 to £5 per person.
3 - Lawyer Verification or Fraud Prevention Checks
Just as the identities of the buyers and sellers need to be identified, so too do the identities and credentials of each solicitor. Fraud prevention checks are becoming standard procedure in this process to prevent fraudulent behaviour. This process costs the client anywhere from £7.50 to £12.
4 - Telegraphic transfer Fee (TT Fee)
At one point in the process, your solicitor will transfer the purchase funds electronically to ensure that the funds arrive in the seller’s solicitor’s account on the completion date. Mortgage lenders also prefer electronic transfers, as they are safer and more secure than other methods. Expect to pay from £15 to £45 for each expected transfer.
5 - Stamp Duty Form Fee (SDLT)
The SDLT form fee is different from the Stamp Duty Land Tax itself. The buyer will pay this fee to the solicitor for completing the SDLT1 form and submitting it to Her Majesty's Revenue and Customs (HMRC) on the buyer’s behalf. This fee is necessary even if no Stamp Duty Land Tax is due; your lawyer should include it in the quote.
Depending on the transaction, this might be somewhere between £20 and £50.
6 - The Leasehold Supplement
Leasehold properties involve far more complex procedures than freehold properties. Solicitors will need to navigate through more documents, forms, and processes to further the conveyancing of a leasehold property along. Most of the time, a solicitor will place a supplemental charge in their quote to account for these differences.
This supplemental charge ranges from £100 to £350.
7 - Mortgage Fees or Acting for Lender Fees
Your solicitor will not only act on your behalf but that of your lender’s. This to ensure that the terms of your mortgage are met and that the lender’s interests are protected. Essentially, you would be lending the services of your solicitor out to your lender for a price. This price ranges from £30 to £75.
8 - Bankruptcy Search Fees or K16 Fees
This is a search required by most lenders. The lender carries this out to determine whether the buyer is bankrupt or in the bankruptcy process. While it is improbable that you will be bankrupt and think of buying a house simultaneously, it adds a layer of security to the transaction at the cost of £2.
Thus concludes part 1 of this treatise on the various fees you might find in your solicitor’s quote or estimate. There are plenty more, which we will cover in a future post.
Buying or selling a home is a major decision in any person’s life. It is crucial to understand how the legal processes, fees, and other complexities work. It is not uncommon for unexpected things to happen throughout the process, but having a basic knowledge of the legalities can help prepare you both mentally and financially for anything. This is the key to ensuring your transaction runs smoothly and successfully.
Do as much research as you need to. Ask solicitors for their advice, try out and compare the results of online conveyancing calculators, and carefully gauge the market fluctuations. This will help you sell or buy a property at the best possible prices to soften the blow of the fees you might incur.
If you’re looking for an online conveyancing calculator to begin your journey, give us a call at Conveyancing Calculator. We offer fully transparent fixed-fee conveyancing quotes. You can even compare prices from nationwide property solicitors instantly.