Buying a property in the UK can be a complex process. It is often said that 1 in 3 agreed sales fall through. However, with careful planning and research, you can avoid some common mistakes when buying a house that many buyers make.
In this blog, I’ll discuss some of these mistakes and offer tips to help you make a successful purchase.
Common Mistakes When Buying a House: Mistake 1
Not Getting a Mortgage Agreement in Principle
One of the most common mistakes when buying a house that many buyers who need a mortgage make, is not getting a mortgage agreement in principle (AIP) before starting their property search. Please don’t underestimate how long it can sometimes take to get an AIP, and then note how long the AIP is valid for.
An AIP is a document from a lender that confirms how much money you can borrow, subject to certain conditions.
It’s important to get an AIP before you start viewing properties, as it will give you a clear idea of your budget and can help you save time viewing properties outside your price range.
Many agents won’t even consider allowing you to view properties, let alone take offers seriously, unless an AIP can be produced.
Getting the right mortgage broker for this can make all the difference. For example, did you know you are unlikely to get a mortgage for a house without running water or a kitchen?
Great mortgage brokers or banks don’t just look at your salary and offer you a loan based on multiples.
Some will even visit your proposed property to see the opportunity and might consider a business loan to convert to a mortgage on the issuance of a completion certificate.
Common Mistakes When Buying a House: Mistake 2
Not Considering Additional Costs
Many buyers make common mistakes when buying a house and one of those is to forget to consider the additional costs of buying a property in the UK.
In addition to the property’s purchase price, you will need to factor in other charges such as stamp duty land tax (SDLT), legal fees, survey fees, and moving costs. It’s important to consider these costs when setting your budget to avoid any surprises later.
These cannot be simply paid for from the mortgage and may leave you with not enough deposit.
Failing to account for SDLT costs
Many homebuyers overlook that they will have to pay stamp duty from their savings when purchasing a property.
Stamp duty is a tax that must be paid on properties above a specific value, and the amount you owe will depend on the property’s value.
Failing to factor in stamp duty costs can leave you with unexpected expenses that may derail your budget.
Not considering legal fees
Along with stamp duty, you’ll need to pay legal fees when buying a property. Legal fees include conveyancing, land registry, and search fees. These costs can add up, and you must account for them to find the funds you need to complete your purchase.
Not employing the correct type of property solicitor for the job required
A conveyancer is often a specialist in property law who focuses specifically on the legal aspects of buying and selling property. They are trained to handle the administrative tasks involved in property transactions, such as conducting property searches, drafting contracts, and transferring funds.
Conveyancers can either be licensed conveyancers or solicitors who specialise in conveyancing.
On one hand, solicitors are qualified lawyers who can usually provide a wide range of legal services, including conveyancing. While conveyancers specialise in property law, solicitors have a broader scope of expertise. They may work on various legal matters, such as litigation, family law, corporate law, and property transactions.
Solicitors are also qualified to provide legal advice, which can be helpful in more complex property transactions where disputes or legal issues are to be resolved. They may also be better equipped to handle unusual or complicated situations during a property transaction.
Whilst employing a solicitor might be more expensive, you will usually enjoy a named contact who personally knows your case and who can see beyond the scope of the simple purchase.
On the other hand, with the cheapest conveyancing firms, you will probably be referred to by case number, and your case is likely to be a tick-box exercise
This is all well and good if you are purchasing a straightforward new build freehold property. When it comes to complications such as property easements, leasehold elements, chancel charges, rights of way and other such complications, your conveyancer may have to refer to an additional solicitor for advice and sign-off.
Your solicitor will also need to be on the panel of your lending bank or building society. If they are not, you may end up with a purchase requiring three legal representatives: a conveyancer, a sign-off solicitor and a solicitor on the bank panel.
Underestimating renovation costs
If you’re planning on renovating your new property, it’s important to factor in the price of those renovations before making an offer.
Home renovations can be expensive, perhaps more so now than ever, and failing to account for those costs can leave you with a property beyond your means to repair or renovate.
Not considering ongoing costs
When you buy a property, you’ll also need to pay ongoing costs such as council tax, utility bills, and home insurance, let alone property repairs and keeping the roof on!
You must factor in these costs to avoid leaving you with an unaffordable property in the long run.
Common Mistakes When Buying a House: Mistake 3
Not Conducting a Property Survey
Another familiar mistake buyers make is not conducting a property survey before making an offer. A property survey is a report that details the property’s condition and highlights any potential issues.
It’s essential to have a survey conducted by a qualified surveyor, as it can help you avoid expensive repairs later on.
There are three types of property surveys: a condition report, a homebuyer report, and a building survey. The type of survey you need will depend on the age and condition of the property.
Hidden structural problems
A property survey can uncover hidden structural problems that may not be apparent during a viewing.
These problems can include issues with the roof, walls, foundation, and more. You must uncover these issues to avoid leaving you with a property that requires expensive repairs.
Safety hazards
A property survey can also reveal safety hazards such as asbestos, faulty electrical systems, or gas leaks. These hazards can pose serious risks to your health and safety, and failing to identify them can leave you and your family at risk.
Drainage and damp issues
A property survey can identify any drainage or damp problems that may be present in the property. These issues can cause mould, mildew, and other problems that can be expensive and time-consuming to fix.
An example will be the case of a cash purchaser I was told about, with no mortgage requirements, who, against all advice, chose to avoid having a survey on a stunningly presented house. As a result, there was pressure to bid and have the house removed from the market.
Having bought the property, they discovered that the old owner had decorated over dry rot concealing a significant problem that would, in the end, cost thousands to replace and repair. That’s many more thousands than the survey would have cost!
Caveat Emptor
There are legal frameworks for dealing with this situation of deliberately concealing a matter that might materially affect the value of a house. Still, there is also the oldest legal property phrase of ‘caveat emptor’, which means literally, ‘let the buyer beware’.
The principle is that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made.
Inaccurate property valuation
Failing to conduct a property survey can also result in an erroneous property valuation. Without an accurate valuation, you may end up overpaying for a property or find that your mortgage lender won’t approve your loan for the amount you need.
Common Mistakes When Buying a House: Mistake 4
Not Researching the Area
Buying a property is not just about the property itself but also the surrounding area. Therefore, it’s important to research the area thoroughly before making an offer, as this can affect the property’s value and your quality of life.
Factors to consider include local schools, transport links, crime rates, and amenities like shops and restaurants.
Again, I am aware of a purchase in which a cash buyer had advice, had a survey and had a good lawyer on board. Still, they all missed the occasionally foul-smelling and antisocial, map-labelled water treatment plant, concealed around 20 meters from the end of the garden.
Common Mistakes When Buying a House: Mistake 5
Not Getting a Second Opinion
Getting caught up in the excitement of buying a property is easy, but it’s essential to take a step back and get a second opinion before making an offer. This could be from a family member, friend, or professional such as a solicitor or property-buying agent.
Getting a second opinion can help you avoid making an expensive mistake. Remember to differentiate between a friend or family member wanting to please you and a professional offering impartial advice based on the facts presented.
Common Mistakes When Buying a House: Mistake 6
Not Reading the Contract
Another of the most common mistakes when buying a house buyers make is not reading the contract thoroughly before signing. It’s important to read the contract carefully and ask questions if there’s anything you need help understanding.
The contract will detail important information such as the purchase price, completion date, and any conditions of the sale. Therefore, it’s essential to ensure you’re comfortable with the contract terms before signing.
This is especially important if there are easements, rights of way or the property is leasehold.
Common Mistakes When Buying a House: Mistake 7
Not Using a Property Buying Agent
Finally, one of the biggest mistakes that many buyers make is not using a property buying agent. A buying agent will often save you more money than they cost and will almost always save you a great deal of time and effort, offering peace of mind.
A property buying agent can offer expert advice and guidance throughout the buying process and can help you avoid many of the common mistakes listed above. They can also help you find properties not on the open market, giving you access to a broader range.
Common mistakes when buying a house: Mistake 8
Assuming that your Loan to Value ratio will be acceptable after re-negotiation
I have seen it happen time and again. Following a poor survey, or simply a nasty gazump or guzunder, the price a buyer pays for their property affect their agreed mortgage loan to value ratio.
For example; Assume you have an AIP of 70% of a property worth £1,000,000 meaning that you can borrow up to £700,000. After reducing the price to £950,000 you can now only borrow £665,000 from the bank/building society. This may mean that you need a new mortgage agreement.
Assuming that your mortgage offer will last indefinitely
Most mortgage offers are time limited, some to exchange of contracts and some to completion. You will need to renew your mortgage offer if your purchase takes too long.
It is also worth noting that should the Government change legislation during your purchase, such as a change in Stamp Duty tax levels, this may affect your ability to buy the property too.
Solution
Rowallan Buying Agents
Having been in the property business for over 35 years (at the time of writing), there are few with Jason’s book of contacts. He has lived and worked in 14 counties across the breadth and length of the UK, and Jason’s knowledge of properties and agents is second-to-none.
Jason has worked in some of the UK’s best-known, national, and international firms and several niche companies. His experience is outstanding, and when it comes to preparing a property for sale or a client for negotiation, he has heard it all.
He is acutely aware of the most common mistakes when buying a house that buyers make and has all the skills and contacts to help avoid them.
With Jason’s expertise, you will be immediately respected as a buyer and well-placed to enjoy a thoroughly advantageous search and overall experience.