subject: Buying a Property in Scotland - A Guide to the Scottish System of Property Purchase [print this page] Buying a Property in Scotland - A Guide to the Scottish System of Property Purchase
Find a Scottish Solicitor
The first thing a buyer of Scottish property needs to do, is to find a good Scottish Solicitor. You should make a point of ringing around, asking solicitors about the services they provide, particularly if you will be seeking mortgage and financial advice for your purchase. An organised and reputable firm should quickly send you a quotation of their fees and outlays which you should examine carefully and be sure you fully understand the service they provide.
Get Your Finances in Order
Once your offer for a property has been formally accepted in Scotland, both you and the seller are legally committed to the purchase. As a buyer, it is therefore very important that you have an "agreement in principle" from your chosen mortgage lender before you view any properties and commit to an offer. The last position you want to find yourself in is legally committed to buying a property you haven't been able to arrange a mortgage for. Even if you are a cash buyer, you must still ensure that funds are available on the settlement date, otherwise strict financial penalties may be levied against you for breach of contract.
How to Find a Suitable Property in Scotland
Most property in Scotland is sold through firms of Solicitors who carry out estate agency services as well as the legal parts of the transaction (i.e. the conveyancing). Most regions have a "Solicitors Property Centre" where you can find all the properties sold by solicitors in that region. Although there are many good independent Estate Agencies in Scotland, most properties are sold by Solicitors. In Edinburgh for example, the Edinburgh Solicitors Property Centre (E.S.P.C.) in George Street, Edinburgh sells around 90% of properties in the Capital and has pretty much a monopoly on the Edinburgh Property Market. If you want to find something very special, however, you will generally need to consult the higher end estate agencies or seek professional help.
Viewing Properties in Scotland
Properties for sale in Scotland are often available to view at set times without a prior appointment, typically 7-9pm on a Thursday and between 2-4pm on a Sunday, or you may make a formal appointment with the seller's themselves or their agents to view at other times of the week. To find out when there are open viewings, either visit the agents website and download the "sale particulars" or ring them and ask to be sent them. (Note that open viewings aren't so common when the market is poor.)
The Purchasers Information Pack (PIP)
It is the law that the seller of a residential property in Scotland has available a "Home Report Pack" which you must always ask to see and study carefully. This pack will contain a survey, valuation and lots of useful information about the property you are considering buying and is in three parts as follows:
(1) The Single Survey
Since 1st December, 2008, sellers have been required, under the Housing (Scotland) Act 2006, to provide prospective purchasers with a Purchasers Information Pack (PIP) which includes a seller's survey carried out by a Royal Institute of Chartered Surveyors (RICS) qualified surveyor. The Single Survey contains an assessment by a surveyor of the condition of the property, a valuation and an accessibility audit for people with particular needs. Importantly, you, as the buyer, will have a statutory right to claim damages if the survey does not meet the necessary legal requirements. (Although we have seen very few surveys that are really worth their salt).
Some buyers are still sceptical about accepting what is written in a survey report commissioned by the seller and you may find that you wish to commission your own survey. This may simply be because the single survey does not address all the issues you as the buyer would like to investigate about the property.
(2) The Energy Report
The Energy Report contains an assessment by a surveyor of the energy efficiency of the home and its environmental impact. It also recommends ways to improve its energy efficiency.
(3) The Property Questionnaire
The property questionnaire is completed by the seller, and generally provides additional information about the property, such as its Council Tax banding and factoring costs.
Noting Your Interest in a Property You Wish to Buy
When you find a property advertised at "offers over" which you'd like to purchase, you must ask your solicitor to "note interest" in the property, with the seller's agents, so that the property will not be sold without you being given an opportunity to make an offer for the property. If there are other notes of interest, from other rival buyers, then the seller's solicitor or agent will invite formal "blind bids" to be sent to them in writing at a "closing date". If there should be no other interested party, however, you are technically free to make an offer, which may or may not be accepted.
Making an Offer for a Fixed Price Property
If a property is advertised at a "fixed price", however, then the seller is effectively saying that he will accept the first offer made at that price, although you can sometimes negotiate a lower price, especially in a poorer market. A seller of a property at a fixed price is not however legally obliged to accept your offer. Be aware that seller's of fixed price properties will normally require you to carry out your own survey, or accept the Seller's own survey, within a short time period - normally 48 hours.
Deciding What Price to Offer
Scottish property is traditionally marketed at a "fixed price" or by "offers over" or, more recently "offers around" (or in the region of). These price structures can be explained as follows:
In setting a "fixed price", the seller is effectively saying that they will accept the first offer at that fixed price, although they are not legally obliged to do so. Newly built homes are nearly always sold at a fixed price in Scotland and older homes are very often sold at a fixed price during poorer market conditions.
In the "offers over" system the property is advertised at "offers over" a stated figure, with the "offers over" price set typically 10% or more less than the actual estimated value. Interested parties are invited to make blind bids at a "closing date" when the seller normally accepts the highest offer (but isn't obliged to do so, or even any of them for that matter).
"Offers around" is a relatively new pricing structure to Scotland which has really come about as a result of the valuation contained in the single survey. The offers around price will be typically very close to the single survey valuation.
Deciding on what to offer for a property is really more of an art than a science, especially in a booming market. Very popular properties will almost certainly never be offered at a fixed price and you will typically have to enter into a blind auction and submit an offer at a closing date, with other interested parties, to secure the property. Your solicitor should be able to offer guidance as to what to bid.
The "offers over" method is often referred to as the "upset system", whereby a specified upset price is set which the seller expects to be exceeded by anywhere between 10-30% (can sometimes be much more). When deciding what "offers over" price to bid for a property at a "closing date" (when all bids must be received and are opened), it can be very difficult to know what to offer, as effectively what's taking place is a blind auction, and you will not know what your rivals are offering. Probably the best advice is to do enough research to ensure you're not paying ridiculously over the odds, but at the same time making the best offer you can reasonably afford without over stretching yourself.
Deciding on a realistic price to pay for a property needn't be too difficult and is really a matter of common sense and the constraints of your budget. There are lots of internet sites (e.g. Registers of Scotland/ Zoopla) that will allow you to look up recent house sale prices in an area and you should be able to make "comparisons" with those recently sold to come up with a sensible price to offer. Your solicitor/estate agent should also have a good idea of what to offer and you will certainly need their expertise if the house you are wanting to buy is unique or unusual in any way and attracting a lot of interest.
Making Your Offer, it's Conditions and Acceptance
All formal offers should be made in writing through your solicitor (scribbled handwritten notes are not unheard of but don't do much for your credibility!) and will have certain conditions and provisions attached, such as what is included in the sale price (e.g. curtains, blinds, carpets, cookers, dishwashers, washing machines etc) and most importantly the "date of entry", which is essentially the day you pay the purchase price and get the keys to your new home along with the title deeds.
Once your offer has been submitted, the seller normally has 24 hours to verbally accept your offer subject to contract (known in Scotland as "conclusion of missives"). If your offer is accepted and you have made your offer subject to carrying out your own independent survey (as opposed to just relying on the PIP survey) you will usually have 48 hours to have the survey carried out and satisfy yourself that the property is in satisfactory enough condition to proceed. If, for any reason, your surveyor "down-values" the property you may seek to re-negotiate the agreed price or, if he spots problems, commission your own further specialist reports for any damp, infestation, structural or other such problems. You may also wish to pull out if the survey throws up too many insurmountable problems.
Checking Title and the Property Searches
At the point of making your offer to buy the property, your solicitor may not have checked the Title of the property you're now buying and should he uncover any serious Title defects or defects from his other enquiries (particularly the searches) you may still be permitted, under the terms of the missives, to withdraw from the purchase. Searches include a "property enquiry certificate" from the local authority, which shows up any planning proposals or statutory repair notices affecting the property. Your solicitor will also check that any building works or extensions to the property have the necessary "building warrants" and "completion certificates". He will also check whether the property has been registered in the Land Register for Scotland (a map based register of state guaranteed titles) or is still languishing back in the register of deeds called the General Register of Sasines (GRS). Whichever register the title is held on, he will obtain the necessary reports to ensure the seller has good valid title to sell the property to you. During your solicitor's enquiries there may be an exchange of letter's (known as "missives") between your solicitor and the seller's solicitor's until everything has been agreed upon and the "bargain is concluded" between you and the seller.
The Conclusion of Missives
Once the missives have been concluded for the sale and there is a "consensus in idem" (meaning agreement on the same thing) you, as the buyer, will be legally committed to purchasing the property and will not be able to pull-out without suffering at least a financial penalty for breach of contract. It is therefore perhaps wise for your solicitor not to conclude missives until your mortgage (or other funds) has been officially confirmed, although it should be remembered that conclusion of missives should be given high priority and not unnecessarily delayed without good reason.
Transferring Title and Your New Mortgage
Once all parties are happy to proceed with the sale a "draft disposition" will be prepared by your solicitor which will ultimately transfer legal ownership of the property to you as the purchaser. This will be sent to the seller for signing in time for "settlement" of the transaction. If you require a mortgage, your solicitor will also normally be acting for your mortgage lender as well and will prepare what is known as a "Standard Security" which is effectively the mortgage deed that secures the loan over the property you are buying. You will be asked to sign the Standard Security in order to obtain your mortgage. The day before the agreed "date of entry" to your new home, your solicitor will draw down the mortgage funds from your chosen lender, check the final searches and advise you as to when the keys are likely to be available. On the actual date of entry, the funds for the full purchase price will be transferred to the seller's solicitors and in return the seller's solicitor will send the signed disposition along with the land certificate or title deeds to your solicitor. Once you've been advised by your solicitor that the transaction has been "settled" you will be free to collect the keys to your new home and move in.
Check the Property When You Move In
Upon moving in, you should check that all the fixtures and fittings included in the sale are present in the property. Importantly purchasers normally have 5 working days to check any central heating system is in reasonably good working order. If you find that anything is missing, or that the central heating isn't in good working order, then you should contact your solicitor immediately who will make a claim against the seller.
To finish off the transaction, your solicitor will send the Disposition and any Standard Security, along with any other title deeds, to the Registers of Scotland at Meadowbank in Edinburgh to have you registered as the new owner in the Land Register for the relevant Scottish county. Within a few months your solicitor will send you a new Land Certificate with yourselves shown as the new owners of your property. You can now rest easy that you have a state guaranteed title to your new home.
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