The house buying process in Scotland is slightly different from that in England and Wales. It’s not particularly complicated, and buying north of the border can often be quicker, but for those relocating from England and Wales there are a number of points you need to bear in mind.
Agreement in principle
Before you begin house-hunting in Scotland you need to have an agreement in principle for your mortgage. An agreement in principle takes the form of confirmation from your lender that, subject to various conditions, they are prepared to give you a mortgage up to a certain amount. This amount will be based on your income in much the same way as it is in the rest of the UK. Without an agreement in principle in place, any offers you make on properties are unlikely to be taken very seriously.
In England and Wales, houses are normally advertised at a given price and the vendor accepts that he may well have to settle for a price that is lower than the original asking price. Under the Scottish system, the vendor sets a price and invites offers in excess of this via a sealed bids system. Although this type of secret bidding is sometimes seen in the rest of the UK, it is normally only in cases where the property is particularly expensive or desirable.
When you buy a house in Scotland, if your offer is accepted, you are immediately under an obligation to buy that property. This is why an agreement in principle is required before you go house-hunting. By contrast, in England and Wales, you can pull out of buying the property without penalty up until the time when contracts are exchanged.
The Scottish vendor is also committed to the deal as soon as he accepts the buyer’s offer. Hence the risk of gazumping (where the vendor later accepts a higher offer from someone else) is removed.
Because of the earlier commitment to buy, solicitors play a much greater role in the buying and selling of homes in Scotland. In many cases the solicitor will act as the selling agent for a property rather than an estate agent.
The actual house-hunting process in Scotland is much the same as anywhere else. But don’t forget, when you are looking at properties, that the advertised price is the minimum you will have to pay, and is not a starting point for bargaining downwards.
As a buyer, you will need to appoint a solicitor before, or as soon as, you see a property you want to make an offer on. Once you are ready to make an offer, your solicitor will contact the selling agent and ask them to “note interest”.
Finalising the mortgage
After this, you will need to finalise your mortgage application by going back to your lender and providing details of the specific property you are planning to buy. Once this is done, the lender’s valuation and your own survey can be carried out.
Arranging a survey
Although your own survey is not compulsory, it is strongly recommended that you have one done before making an offer. Because you are legally committed to buy the property once you make your offer, it is important to know as much as you can about its condition. The results of the survey will help you as well when it comes to deciding how much to offer.
Of course, at this stage, there is no guarantee that your offer will be accepted, and so it is not uncommon to end up having to pay for surveys on more than one property. This is, unfortunately, one of the disadvantages of the Scottish system. In England and Wales, where you can make your offer and then pull out before contracts are exchanged, buyers normally only have to pay for one survey.
Making an offer
After the seller’s solicitor has received notification of interest from two or more buyers, he will announce a closing date by which all of the offers must be received. Because a sealed bids system is used, no-one knows what anyone else has bid. Also, each buyer can only bid once, so it is important to think very carefully about what size offer to make and get it right first time.
Your solicitor will make the offer on your behalf and will also advise a “date of entry”. This is the date when you will be given the keys to your new home, and is the equivalent of the completion date used in England and Wales.
Once the closing date for offers comes, the vendor will accept the highest bid and from this point on both parties are committed. There are no deposits involved unless you are buying a new property, but if either the buyer or the seller pulls out from here on, they are liable for any losses the other party may have incurred.
Concluding the missives
After the offer is accepted, the buyer’s solicitor will “conclude the missives”. This is similar to exchanging contracts under the English system. Once all the details of the sale have been agreed via this procedure, you as the buyer are responsible for the structure of the building and need to make sure you have adequate buildings insurance in place.
All the funds to buy the property, together with all the fees, need to be ready for forwarding to your solicitor about two weeks before the date of entry. These monies will be transferred to your solicitor the day before your date of entry, and you will then need to sign the title deed to the property.
Finally, the vendor’s solicitor will hand over the keys and the “disposition document” which legally transfers ownership of the property to you.
If you have any questions or concerns about the house buying process in Scotland (or anywhere else) or if you need help finding a mortgage, you can contact us for a free no-obligation discussion with a qualified mortgage specialist.