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Frequently Asked Questions

What if I want to rent my property?
I am going to buy with my partner or some friends, do we need special arrangements?
When do I pay stamp duty & how much is it?
How do I sign deeds that are sent to me?
What is a closing date?
At what stage do I instruct a solicitor?
Do I have to sell before I buy?
What is pre-owned assets tax?
Can the same solicitor act for both seller and purchaser?
How do I get a mortgage?
Do I have to have a survey?
When should I instruct a survey?
What are the legal fees for buying a house?
What are the costs of selling a house?
What are missives?
What does “noting interest” mean?
What is meant by “offers over”?
What are the main differences between buying property in Scotland and England?

What if I want to rent my property?

We will be delighted to deal with the letting of residential property for you whether you are Landlord or Tenant of the property. Our service will include:

Landlord
We will advise you on the most suitable type of lease to make sure that at the expiry of the lease, you will be able to recover possession of the property. This advice will include:
(i) drafting, adjusting and arranging for the signature of the lease;
(ii) serving the Tenant with the correct Statutory Notices relating to the lease;
(iii) providing you with copies of all lease documents.

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I am going to buy with my partner or some friends, do we need special arrangements?

Property Agreements
More unmarried couples than ever are buying properties. In these situations, title is often taken in joint names of the parties with no provision for how the property is to be dealt with in the event of the separation of the parties.

In many cases, the parties do not contribute the same amount to the deposit; while in others the mortgage repayments are shared equally between the parties.

Your solicitors will advise you about the preparation of an Agreement regulating how the property will be dealt with in the event of the separation of the parties. This Agreement will include, where suitable, detailed provisions for how the property is to be sold and apportioned if the parties cannot agree as to the sale of the property.

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When do I pay stamp duty & how much is it?

Stamp Duty is a tax which is payable only by the Buyer. Where the purchase price is £125,000 or less, the buyer will not have to pay Stamp Duty. Stamp Duty needs to be paid by buyers where the purchase price is over £125,000. Stamp Duty must be paid on settlement of the purchase and your solicitor will ask you to let them have enough funds to meet the Stamp Duty shortly before the settlement date and request that you sign a form called an SDLT for Stamp Duty purposes.

When your solicitor receives the Disposition at settlement, your solicitor will then send the signed SDLT Form down south to the Inland Revenue Stamp Office. The Stamp Office will check the form and ensure that the right Stamp Duty has been paid to them and then return a receipt to your solicitor. The Disposition can then be registered at Registers of Scotland. The rate of Stamp Duty will vary with the purchase price and the current rates are as follows:

Purchase Price Rate of Duty
£125,001 - £250,000 1% of the purchase price
£250,001 - £500,000 3% of the purchase price
£500,001 and over 4% of the purchase price

The rate of duty is rounded down to the nearest five pounds.

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How do I sign deeds that are sent to me?

The following instructions provide help for individuals signing deeds all in accordance with The Requirements of Writing Act that came into force in 1995. It is important, for the validity of the document that it is signed properly, and individuals should therefore read these guidelines before signing the document. The grantors and one witness must sign the document.

The grantor or grantors of the document must:

(a) read the document carefully.
(b) SIGN on the last page of the document (and the last or only page of any Inventory, Plan or Schedule attached to the document) with his or her usual signature, where indicated.
(c) Sign in the PRESENCE of one witness or verbally acknowledge the signature to him/her.

The witness must:

(1) be an adult.
(2) witness the signing or hear the grantor or grantees acknowledge the signature(s).
(3) SIGN on the last page only (NOT the Schedule, Inventory or Plan).
(4) write the word "witness" in his/her OWN HANDWRITING, after his/her signature.
(5) know the grantor.

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What is a closing date?

A closing date is the method by which the estate agent brings together all the interest in the property. A date is set and intimated to all parties who have noted interest and that is the time by which they must have a written offer lodged. Normally the offerers solicitor will lodge the offer on the morning of the closing date. At the appointed time the offers are opened and then it is for the sellers to consider the offers and the various terms and conditions in them and decide if they are going to accept any of the offers. There is no obligation on the seller to accept the highest or indeed any offer, though it is unusual if one of the offers is not accepted.

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At what stage do I instruct a solicitor?

Good professional advice and guidance is invaluable. We would always recommend that a solicitor’s advice is sought at the earliest opportunity.

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Do I have to sell before I buy?

Management of a sale and purchase is always difficult. Again market conditions may dictate tactics but it must be borne in mind that the submission of an offer is the first step towards the conclusion of a contract and all contracts contain heavy financial penalties in the event of default by the purchaser. A purchaser who commits to a purchase before concluding a sale must be sure that they are able to finance the purchase in circumstances where they have to pay for their purchase before they conclude a sale.

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What is pre-owned assets tax?

Who is likely to be affected?
People who have entered into contrived arrangements to dispose of valuable assets, while retaining the ability to use them and this includes gifting a house to children but continuing to live in it. The Inland Revenue view the main purpose of arrangements subject to the charge is avoidance of inheritance tax. There are specific exceptions to the charge which are explained below. But even where the purpose was not to avoid Inheritance these transfers are caught by the new tax provisions.

General description of the measure
A free-standing income tax charge will apply from the 6 April 2005 to the benefit people get by having free or low-cost enjoyment of assets they formerly owned (or provided the funds to purchase). The charge will apply both to tangible assets (with separate provision for land, including living accommodation,) and to intangible assets. Broadly following the model of the benefit-in-kind charge on employees, the rules will quantify an annual cash value for the benefits enjoyed by a taxpayer: this will be treated as an addition to their taxable income, subject to a threshold, and a set-off for any payments made by them for the benefit.

Operative date
The charge will apply in or after the income tax year 2005-06.

Current law and proposed revisions
The Government is aware that various schemes designed to avoid inheritance tax have been marketed in recent years. These use artificial structures to avoid the existing rules about gifts made with reservation. As a result, people have been removing assets from their taxable estate but continuing to enjoy all the benefits of ownership. The Government is determined to block this sort of avoidance and announced in the Pre-Budget Report that people who benefit from these sorts of schemes would be subject to an income tax charge from April 2005, to reflect their additional taxable capacity from receiving these benefits at low or no cost.

The proposed charge will not apply to the extent that:
the property in question ceased to be owned before 18 March 1986;
property formerly owned by a taxpayer is currently owned by their spouse;
the asset in question still counts as part of the taxpayer’s estate for inheritance tax (IHT) purposes under the existing “gift with reservation” (GWR) rules;
the property was sold by the taxpayer at an arm’s length price, paid in cash: going further than the consultation document, this will not be restricted to sales between unconnected parties;
the taxpayer was formerly the owner of an asset only by virtue of a will or intestacy which has subsequently been varied by agreement between the beneficiaries; or
any enjoyment of the property is no more than incidental, including cases where an out-and-out gift to a family member comes to benefit the donor following a change in their circumstances.

More generally, the rules for tangible assets will mean that former owners will not be regarded as enjoying a taxable benefit if they retain an interest which is consistent with their ongoing enjoyment of the property. For example, the proposed charge will not arise where an elderly parent formerly owning the whole of their home passes a 50 per cent interest to a child who lives with them.

Intangible assets formerly owned by the taxpayer (or derived from other property formerly owned by them) will be treated as giving rise to a taxable benefit, only to the extent that the taxpayer may derive benefits from them, and those benefits would diminish the benefits potentially available to others. So for example, no charge would apply if the taxpayer has funded life insurance policies held on trust and the taxpayer’s continuing claims are limited to particular retained benefits, such as the return of the life assurance premium, and the balance of the policy value is held on trust solely for others. But a charge would be due if, say, the whole value of such a life policy was held on discretionary trusts for a class of beneficiaries including the settlor (and the circumstances were such that the trust property was not covered by the existing “gift with reservation” rules).

Territorial scope
The charge will apply to residents of the UK. For taxpayers who are domiciled in the UK (or deemed to be), the charge will apply to their assets anywhere in the world. For taxpayers who are not domiciled in the UK (or not deemed to be), the charge will apply only to their UK assets. For taxpayers who have become domiciled in the UK (or deemed to be), the charge will not apply to any non-UK assets which they ceased to own before they acquired that domicile.

De minimis
The consultation document said that there would be a substantial de minimis (i.e. minimum) threshold below which the cash value of benefits in a given year would be disregarded. The Government has decided to set this threshold at £2,500 per year. This seems to us to be incredibly low. In circumstances where the gift has been a house transferred to children only houses where the annual rent in the open market was less than £50 per week would escape and not many properties would command less than £50.00per week so this will catch virtually every house which has been transferred.

An election for transitional relief
The Government proposes, additionally, that taxpayers involved in existing schemes may choose a special transitional treatment if they elect for this by 31 January 2007. If they elect, they will not be subject to the new income tax charge in relation to property covered by the election, but the property in question will be treated as part of their taxable estate for IHT purposes, while they continue to enjoy it, in essentially the same way as under the existing “gift with reservation” rules. As under those rules, property subject to such an election would be potentially eligible, in due course, for the normal IHT reliefs and exemptions available, for example, to business and agricultural property, and to heritage assets. Therefore if your estate will not be liable for IHT even if the value of the gifted house were add back then no IHT would be payable. Making this election in time will be very important.

Valuation and further consultation
The Government has confirmed the approach outlined in the consultation document and proposes that the cash value of benefits should be determined by reference to market rentals in the case of land and we understand that the District Valuer will be responsible for fixing the notional rental value.

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Can the same solicitor act for both seller and purchaser?

Generally speaking the answer is no, however there is an exception to the rule and that exception is known as the “established client rule”. If a firm of solicitors has previously acted for the parties then they may with the consent of both parties act. This rule extends to cover situations where the firm has acted for members of the immediate family, close relations may therefore be regarded as established clients.

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How do I get a mortgage?

The advice and guidance of a good broker is essential. The mortgage marketplace is a confusing maze. A good broker can really save you money and most brokers do not charge up front fees, generally being satisfied with the procuration fees paid directly to them by the lenders. We do not offer a mortgage brokerage service but are happy to introduce clients to brokers we have worked with in the past and who we have found to be efficient and friendly.

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Do I have to have a survey?

There is no obligation on a purchaser to have a survey, but it is simple prudence to seek professional advice to confirm the condition of any property. There are two kinds of inspection.

Valuation for Mortgage Purposes
The nature of this type of valuation is set out in the RICS Valuation and Appraisal Manual. The following is a brief summary of the main characteristics of the service:

1. The Valuer's Role
The valuer's role is to advise the lender as to the open market value at the date of inspection and as to the nature of the property, together with any factors likely to materially affect its value.

2. The Scope of the Inspection
Subject to the valuer's judgement, a visual inspection is to be carried out of so much of the exterior and interior of the property as is accessible to the valuer without undue difficulty.

The inspection is made whilst standing at ground level and at various floor levels. Parts not readily accessible or visible are not inspected. Furniture and effects are not moved. Floors coverings are not lifted. Cellars are inspected to the extent that they are readily accessible but underbuildings are specifically excluded from the inspection. Roof voids are inspected only from the hatch without entering the roof void. In the case of flats, roof voids are inspected to the same extent if there is direct access from the flat.

This is a limited inspection for the specific purpose stated. It is normally carried out in a much shorter time scale than a homebuyer's survey and valuation.

It is normally carried out to the direct instructions of the lender but where it is instructed privately, the general terms are incorporated as though the report were being prepared for a lender.

3. The Report
The report is confined to answering questions raised by the lender. It contains reference only to those matters which might materially affect the value.

The RICS/ISVA Homebuyer's Survey and Valuation Service (Scotland)
The nature of this service is set out in the RICS Valuation and Appraisal Manual. The following is a brief summary of the main characteristics of the service:

1. The Service
The homebuyer service includes:
An inspection of the property
A concise report based upon the inspection
A valuation, which is part of the report.

The main aims of the service are to give guidance on value to the client, together with professional advice which will help the client to choose whether or not to go ahead with the purchase and to be clear what decisions and actions should be taken before completing the purchase.

2. The Scope of the Inspection
The inspection is a general surface examination of those parts of the property which are accessible: in other words, visible and readily available for examination from ground and floor levels. Furniture, floor coverings and other contents are not moved or lifted and no part is forced or laid open to make it accessible.

Services are inspected but not tested. Drains covers are not lifted. Such equipment as a damp meter, binoculars and a torch may be used. A ladder is used for hatches and for flat roofs not more than 3 metres above ground level. Accessible roof spaces and underbuildings are inspected, provided this can be done safely and without undue difficulty. Common areas of flatted blocks are inspected to assess their general condition.

3. The Report
This provides the surveyor's opinion of those matters which are urgent or significant and need action or evaluation before an offer to purchase is made. Matters assessed by the surveyor as not urgent or not significant are outwith the scope of the service and are generally not reported. The report contains the valuer's opinion as to open market value and advice on valuation for insurance purposes.

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When should I instruct a survey?

Views on this vary. In the past offers which were subject to survey would not be looked at, but recently there has been an increasing trend towards offering before instructing a survey. If the offer is acceptable in principle a survey can usually be done within 48hours. There is however a danger in this practice at a closing date where an offer subject to survey may be rejected in favour of a “clean” offer without such a condition. Market conditions may determine whether it is feasible to offer conditional upon survey and again the advice of your solicitor should be sought.

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What are the legal fees for buying a house?

Again fees vary from firm to firm; we advise you to ask your Scottish solicitors to give you a fee quote for your business. Your solicitors will issue you with a Terms of Engagement letter at the outset of the business. If you do not have a Scottish solicitor our Estate Agency staff will be happy to recommend local Firms of Solicitors to you. We recommend that you involve your solicitor at the earliest stage so that you can be properly advised on the legal process and the particular aspects of your purchase which will be unique to your circumstances and the property you wish to buy.

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What are the costs of selling a house?

There are two separate elements in a sale, the estate agency fee and the legal fees for the conveyancing. We are happy to discuss directly with you your particular requirements and to tailor a package to meet your requirements. We will provide a fully detailed quote before embarking on a sale. We can recommend you to solicitors.

Note: Some of the directors of our companies are practising solicitors and are partners in the firms we recommend.

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What are missives?

Missives is the term applied to the exchange of a series of letters between solicitors comprising a formal offer, qualified acceptance and other letters which are exchanged leading to a conclusion of a bargain, in other words the letters that go to make up the contract for sale. In Scotland the contract letters are normally signed by the Solicitors, not the purchaser and seller themselves.

This offer contains Clauses that are needed to make sure that the buyer receives a proper title to the property in exchange for payment of the price. Besides this, the offer gives the buyer the right to get hold of documents such as planning consents or building warrants relating to any alterations, and any timber guarantees

The seller's solicitor would normally then send an acceptance to the buyer's solicitor but which would contain qualifications. These qualifications can relate to changes in the price, changes in the date of entry, or qualification of any of the other clauses and will add new clauses.

Missives would normally be made up of a series of and end with a letter from one solicitor to the other confirming that all matters have now been agreed and that the bargain is now concluded.

This series of letters make up the missives and is the formal contract between the buyer and seller. If a dispute arises between the buyer and seller before or, in some cases after, the date of entry then the matter would normally be sorted out by referring to the missives.

Until the missives are concluded there is no contract between the parties and either party can normally withdraw from the contract without liability. As a result it is important that missives are concluded as quickly as possible. It is helpful to us to have as much information as possible when the house is put on the market.

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What does “noting interest” mean?

Noting interest is a convention only and places no obligation on the seller or the agent. It is the way of indicating serious interest and of saying that if there is to be a closing date for offers I want to be told & to be given the opportunity to submit an offer. From the sellers point of view it is useful tool in managing the sale, gauging the interest and then bringing the interest together at a closing date to get the best price at closed bidding.

It should be noted that “noting interest” does not mean that a closing date has to be set and if the seller were to receive an extraordinary offer there is nothing to stop the seller taking the “bird in the hand”.

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What is meant by “offers over”?

This literally is what is expected. The percentage over that properties sell for varies from area to area and even depends on the type of property and the general level of market activity. In any market the laws of supply and demand apply and where there is a lot of demand purchasers have to bid up to try and secure properties. We try and price our properties realistically and by that we mean at a level we believe will be supported by an independent surveyor. However offers of ten per cent over the asking price are normal and up to forty per cent over is not unheard of. The best advice is to seek guidance from a local solicitor familiar with the current market conditions.

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What are the main differences between buying property in Scotland and England?

SYSTEM OF PURCHASE OF LAND AND BUILDINGS (KNOWN AS HERITABLE PROPERTY)

Instruction for submission of an Offer:

A prospective purchaser should fully satisfy himself/herself with regard to the condition of the property and its value. This is normally done in the case of domestic properties by having the property surveyed by a Chartered Surveyor or, in the case of agricultural property, by obtaining an opinion from a Chartered Surveyor/Land Agent. Offers which are conditional upon the Offerer subsequently obtaining an acceptable survey report or valuation are unlikely to be acceptable to a Seller.

Finance:
If a purchaser requires to borrow finance to fund the purchase then the finance should be in place before the Offer is submitted. Usually the Lender will require the completion of a formal application form and to have had sight of a Survey Report.

A prospective Purchaser having satisfied themselves as to value and condition should then instruct their Solicitor to submit an Offer on their behalf. An Offer in Scottish form is fairly lengthy and will contain relevant conditions not only relating to price and date of entry (completion) but also covers matters relating to the title, title conditions and any alterations which may have been carried out to the property.

Closing Date:
Where several parties have indicated an interest in a property, the Selling Agents normally fix a closing date. This is a specified date and time for receipt of Offers. By convention Offers are usually delivered or faxed on the actual closing date itself. The Seller is not obliged to accept the highest Offer, though it is usually only in the case of Offers failing to come close to the anticipated asking price that Offers would be refused and the property re-marketed. Whilst the terms of the Offer will vary according to the particular circumstances and type of property and indeed may run to as many as thirty separate clauses and conditions, the two over-riding conditions are, firstly, the purchase price and, secondly, the date of entry. The date of entry is the date when the transaction will be completed and when in exchange for the price, the purchaser will receive title to the property and vacant possession.

In the purchase of domestic properties no deposit is payable. By convention on purchase of agricultural land or landed estates, a deposit of 10% is payable within seven days of conclusion of the bargain.

The Offer:
The formal Offer is submitted by the Solicitor acting for the Purchaser, who signs on behalf of the prospective purchaser as his Agent. Normally a letter of instruction from the prospective purchaser confirming that the Solicitor should proceed to submit an Offer is required. Whilst it is unlikely that a seller would instruct his Solicitor to issue an acceptance without any qualification whatsoever, were that to happen the exchange of the Offer and the Acceptance would constitute a binding and enforceable legal contract. In practice, the Seller’s Solicitor issues a qualified acceptance which could intimate the acceptance of the offer in principle but might qualify one or more of the terms and conditions of the offer and may add more conditions or obligations on the purchaser. This is effectively a counter-offer and it is up to the purchaser to either accept these qualifications in total, accept the qualifications in part and introduce further qualifications or reject the qualifications and walk away from the negotiations. The issue of a partial acceptance and further qualifications will lead either to a final acceptance concluding the bargain or perhaps some further adjustment. The process of adjustment of the “missives” as they are known should lead to a concluded contract. This process usually takes at least two weeks but can be even more protracted. The concluded contract may contain some suspensive conditions which require to be fulfilled by either the seller or the purchaser. One example would be that the seller would be obliged to produce clear Local Authority Planning Reports but in the event that those Reports were to reveal any matter materially prejudicial to the Purchaser then the Purchaser would have the right to withdraw from the transaction without penalty.

The date of entry contained in the Offer should be sufficiently far in advance to allow the Solicitors adequate time to complete all the conveyancing formalities and, if appropriate, the security work for any Lender and consequently the date of entry is usually fixed for a date six to seven weeks after the submission of the Offer. The date of entry, however, is an essential condition which must be agreed between Purchaser and Seller and depending on circumstances the date of entry may be any date acceptable to both parties.

The principle difference in the system of land purchase in Scotland as opposed to England or Northern Ireland is that the concept of “subject to contract” does not exist in Scotland. We understand that where properties have been purchased in England or Northern Ireland subject to contract, it is open for the purchaser or the seller to withdraw from the bargain at any time up until the formal exchange of contracts. Whilst the procedures and terminology are different the closest comparison is to say that the conclusion of missives in Scotland is equivalent to an exchange of contracts in England and Northern Ireland, we believe.

The foregoing is intended to be only a guide to the practice and procedures applicable in Scotland. It is not a comprehensive statement of what may happen in any individual transaction but it is intended only to illustrate the broad outline of how contracts for purchase of land and buildings are made.

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