Conveyancers are facing an unprecedentedly difficult time and further news this week will do nothing to improve their mood.

Whilst something clearly needed to be done about the system where there were no real quality checks on the standard of conveyancing, with many law firms and licensed conveyancers offering conveyancing at a ridiculously low price, a cartel is perhaps also not the answer.

Historically, estate agents have increasingly controlled the conveyancing food chain, with solicitors becoming ever more dependent on estate agent’s favour, but now it’s the lenders that are increasingly seizing the initiative.

So, to this week’s news – HSBC has announced that it will only now allow a panel of just 40 law firms to handle its mortgage work. Bearing in mind property buyers usually instruct the same solicitor as is sued by the lender, or more accurately historically, the buyer chooses a solicitor and almost all are accepted on panels, this means that buyers going with an HSBC mortgage face a stark choice – use HSN+BC’s lawyers or pay a lot more (2 fees in effect) and possibly face hurdles and obstacles.

Buyers who agree to use an HSBC panel firm will pay conveyancing fees of £399.00 plus vat as a minimum, rising in bands depending on the purchase price. If they opt not to use the HSBC panel firm they will need to pay HSBC’s legal fees of £160.00 + VAT (£192) plus their own fees. It will be interesting to see how client react to this, especially those who have happily used solicitors previously.

Who gets to be on the select panel? It appears that HSBC have opted for panel firms affiliated with Countrywide Surveyors & Estate Agents. Why this is the case we are not clear.

Whilst HSBC is a relatively small player in the mortgage market, many of the main lenders have severely cut their panels in the last 2 years and this latest move may herald an ever more elite group. That’s fine in some ways, but allegiances and arbitrary decisions are perhaps not the best way for lenders to approach such matters and the restrictions do clearly fetter a customers discretion.. If solicitors sought to do such a thing they would be in breach of their practice rules, so there obviously isn’t a level playing field.

What do you think ?

As widely reported in many media over several years, the dream of home ownership, or as some would call it a “British obsession” with home ownership looks more and more unrealistic for a whole generation of Londoners. Further, the figures from a new report show yet again how inflated and unrealistic the property boom of the last decade was. It also perhaps indicates how fast and loose lending was and that many mortgage applications may have contained perhaps inflated or exaggerated figures.

A survey into London property prices by the National Housing federation highlights some quite scary figures which show just how big the gap is between the affluent few and the vast majority living in the capital, as follows :-

• An average salary of £87,000.00 is needed to buy a property in London. Based on average annual salaries of less than £30,000.00 per person and rising unemployment, this figure is out of reach for the majority
• the average property in London sells for  nearly £410,000.00.
• with new rules on bigger deposits where few lenders will lend more than 75% loan to value this means an average deposit of over £100,000.00 is needed.
• Calculations suggest that for a first time buyer on an average salary, even if they save all their disposable income it will take them 15 years to save up a deposit
• Only 4 London boroughs have an average house price which is less than £250,000.00 which are Barking and Dagenham, Bexley, Newham and  Waltham Forest
• There are more than 800,000 people on a waiting list of social housing in London
• Rents are rising fast with the much larger proportion of people renting. Rents have risen by 30% in the past 3 years and are anticipated to rise at least an additional 20% over the next 5 years.

The clear thread from the above is that something will have to give. We can foresee a significant population shift out of London. This may be due to other factors such as many less lucrative City jobs in banking and associated sectors. Buy-to-let investment is looking particularly attractive. Could the seismic economic shifts also result in a return to closer families. The erosion of family ties is one of the more regrettable changes over the past 30 years, so maybe there is a silver lining to the above, which is otherwise quite depressing news !

What do you think ? Are you a prospective first time buyer ? Should the Government do more on social housing, can we afford to spend on social housing as a country in the current situation ?

In medieval times every parish had its own rector. Historically rectors were responsible for the upkeep of churches and in particular the chancel of the building which is the space around the altar to the liturgical east of a church building. The Church of England set aside land within a parish as rectorial or glebe land which was expected to provide income for the rector. This rectorial land could be anywhere within the parish and not necessarily land or buildings attached to the Church itself. During the reign of Henry VIII parts of rectorial land was sold off to private owners and the responsibility to repair the chancel also passed with the land. These private landowners were considered to be lay rectors.

A chancel repair liability is a legally enforceable overriding interest and therefore does not need to be registered against the title to land or property. Under the Chancel Repairs Act 1932, a parochial church council can serve a demand on land owners for the contribution towards the cost of repairing a church chancel.

In the case of Aston Cantlow PCC of v Wallbank, Mr & Mrs Wallbank were the owners of a farmhouse on rectorial land. They were served with a demand by their local church to contribute £6,000 towards the repair of their local church chancel. The claim was reject at the Court of Appeal in 2001 on Human Rights grounds. However in 2003 Aston Cantlow PCC took the case to the House of Lords and Mr & Mrs Wallbank were ordered to pay the repair bill, by which stage had risen to approximately £210,000.00

There is now deadline for PCC’s to register all chancel repair obligations with the Land Registry by 13 October 2013. If the obligation is not registered at the Land Registry, the PCC will lose the right to recover the cost of the chancel repairs from the lay rector after the land changes hands.

Chancel repair liabilities are estimated to affect 3.5 million acres of land in England. It is difficult to determine whether an area of land is affected by a chancel repair liability as land was marked at by rectors in the 13^th century from historical maps and memory which has caused ambiguity over the years.

Due to the ambiguity, until 13 October 2013 when purchasing a property, your solicitor will carry out a chancel check. The search will only be able to determine whether there is a potential risk, and not whether there is a definitive risk. If there is a potential risk your solicitor will advise you to purchase chancel indemnity insurance to cover you against the cost of any future claim.

Conveyancing is the legal transfer of title of property from one person to another and conveyancing fees are charged by conveyancing solicitors. These solicitors facilitate the changeover of ownership between buyer and vendor. So put simply, conveyancing fees cover the legal expenses of moving house and the fees charged by solicitors for their conveyancing services.

These fees can be broken down into two main areas, which are solicitor’s fees and disbursements.

Solicitor’s fees – these are simply the fees charged by your solicitors for their time and their essential expertise.

Disbursements – these are the items that your conveyancing solicitor must pay on your behalf to third parties. Disbursements are usually payable whether or not your solicitor offers a no sale no fees service.

What are disbursements ?

Disbursements can be broken down into various individual items and there are a number of standard disbursements that are involved when you are selling a property, for freehold property and for leasehold property:

Freehold property

Official copies – the pre-contract package that your solicitor sends to the buyer’s solicitor must contain up to date official copies of the freehold Title Register and Land Registry filed plan. These documents prove that you own the property and will show any legal Notices or Charges against the property.

Official copies of deeds – if you do not possess all the deeds for your property you may have to show official copies of Leases, Transfers, Conveyances or other deeds you may have.

Estate agents fees – fees to an estate agent should be paid at the completion of your sale, if you use an estate agent that is. These fees are usually a percentage of the sale price and your conveyancing solicitor will usually pay the estate agents fees from your sale proceeds.

Energy Performance Certificate – an Energy Performance Certificate is a legal requirement and must be obtained within 28 days of your home being put on the market.

Telegraphic transfer fees – if you require the proceeds of your sale to be transferred to you bank you will have to pay telegraphic transfer fees, which relate to bank charges for the transfer of funds.

Leasehold property

Official copies – for the sale of leasehold properties you must provide the leasehold and freehold title, plus those that relate to any intermediary landlords.

Managing Agent’s pack – the buyer of a leasehold property will expect a Managing Agent’s pack, containing property information, such as major works, ground rent, accounts information and such.

Landlord’s fees – you may be expected to pay the costs associated with a notice of Assignment if one is necessary. This may include landlord’s legal fees.

What conveyancing fees should you expect ?

Many conveyancing firms have websites which have an online conveyancing fees calculator, which will give you a good idea of the fees you can expect to be responsible for. They will usually include all the disbursements that would be involved in your sale, but it is important to make sure that they do. A few companies try to hide some of the disbursements in order to make their fees look cheaper, so check an itemised breakdown of all the items that you will have to pay for.

Here is a brief breakdown of the conveyancing fees you should expect:

Freehold properties:

Official copies – £16 plus VAT

Official copies of deeds – £10 to £20 plus VAT

Estate agents fees – often a percentage of sale price but this can vary

Energy Performance Certificate – £40 plus VAT

Telegraphic transfer fees – £35 plus VAT

Leasehold property

Official copies – £16 plus VAT

Managing Agent’s Pack – £200-£280 plus VAT

Landlord’s fees – anywhere from £150 to £500 plus VAT

How to pay conveyancing fees and disbursements

It is common for you to have to make a payment before the sale of your home to cover initial items such as a managing Agent’s pack. On the completion of your sale the remaining disbursements will be paid for with the sale proceeds and your solicitor will often take their fees at this stage too.

I am selling my flat but the lease is short and the buyer wants to be sure  they can extend the lease. What do I do ?

You need to manage your buyer’s expectations. Do they want an extended lease prior to exchanging contracts or are they content with simply inheriting the right to extend the lease? To some extent, this will be dependant on how the buyer is financing the purchase because different lenders will have different requirements.

If your buyer wants the lease extended, you have two options as follows:-

1. Try to negotiate a lease extension  with your freeholder or their managing agent outside of the statutory procedures laid down by the Leasehold Reform Act. In this case, you are somewhat in the hands of the freeholder. They do not have to offer you what you are entitled to under statute. You might not achieve a 90 year extension and you may not get a nil ground rent and you may have to pay a higher premium. On the other hand, particularly if you are not yet a qualifying tenant yourself, you get the certainty of the extension and the certainty of an exchange with your buyer and your legal costs should be lower than  going through the statutory proceess.

2. Serve notice on the landlord to extend the lease under the relevant statutory procedures. You must be a qualifying tenant. In most cases, this will mean simply having owned the flat for two years. You will need to have taken valuation advise as to what figure to offer the landlord.  Once the notice is served the landlord has two months to respond. Invariably, they will serve a counter notice with their  own counter offer. There is then a period of negotiation during which the parties may apply to the LVT. The process is lengthy and can take many months. Whilst the premium is likely to be less than if negotiated direct with the freeholder, legal costs may  inflate this. Some buyers, and some lenders, may be content  for you to serve the notice once contracts have been exchanged and for you to assign the benefit of that notice to them on completion of their registration as owner so that they effectively step into your shows and continue the process with the Landlord. That way they need not wait two years in order to be able to serve notice. Beware that the solicitor acting for the seller must ensure there are adequate clauses in the sale contrac to cate for the proper service of the notice, who is liable if something is wrong with the notice and how it is assigned to the buyer. This requires detailed drafting.

For more information contact James Swede of Darlingtons Solicitors, who are specialists in lease extensions.

Darlingtons Solicitors, based in North London advise that the popularity of second homes in the UK, which are often used as holiday homes, could expose owners to a number of legal and practical risks.

A report by the English Housing Survey: Household Report 2009-10 shows that there are 279,000 second homes in England, but Darlingtons, which is an early adopter of the Conveyancing Quality Scheme (CQS), advises that many buyers can easily overlook potential problems of owning a second home.

James Swede, Managing Partner and Head of property law at Darlingtons advises that there are many risks for those owning a second home, which include :-

• Squatters
• Legal; aspects of short term letting
• insurance consideration
• tax

He further advises that “it is essential that anyone buying a second home contacts a CQS accredited solicitor such as Darlingtons to get solid and sound advice in relation to the potential risks and benefits of buying a second property”.

Darlingtons are one of the first wave of specialist property law solicitors practices which commited and were successful in passing a rigorous Law Society  application and assessment to become part of CQS initiative. The CQS accreditation rewards high quality in residential conveyancing. The scheme is also supported by the Council of Mortgage Lenders, the Building Societies Association, Legal Ombudsman and the Association of British Insurers.

Surprise surprise, just when there is a genuine threat to stop the rampant claims management business in personal injury claims, we now find a new legal broker entering the market in the form of In-deed, started by the founder of property website Rightmove.

We may be proved wrong, but we really can’t see the benefit of this new proposition for either lawyers or those moving house. The new service, trying to break into a market where conveyancing fees are already cut throat and highly price sensitive, is seeking to charge customers  it will refer to it’s panel; of solicitors a fee of some £240.00. It is not charging the conveyancers, presumably only because there is frankly no way the lawyers could afford to pay any brokerage when profit margins are so wafer thin.,

The business model seems to effectively copy Quality solicitors by asserting that the benefit of paying it’s fees is that it will refer a quality conveyance. It bases this premise on research it states has found that 42% of people using conveyancers in the past 2 years stated that good communication is the most important factor when choosing a lawyer to do their conveyancing.

We’ll see. No doubt they have a big marketing budget and will exploit the fact that solicitors, quite incredibly, seem to have learned nothing about marketing their own businesses and remain generally beholden to these types of brokers.

Solicitors, get a grip, you are businesses and businesses need to invest in marketing on an ongoing basis to build their own brand, not someone else’s !

With interest rates still at historical low levels but inevitably set to rise, is now the right time to get a fixed rate deal ? Maybe so, bearing in mind there are some pretty attractive offers to provide certainty in these most uncertain of economic times.

Some of the major lenders are now offering 5 year fixed rate mortgage deals at less than 4% per annum interest. These types of offers have not been around since the boom times as the range of mortagge deals available has contracted hugely.

It is difficult to gainsay when interest rates will raise. On the one hand, inflation is well above target and may get worse before reducing and the obvious way to counteract this is via raising interest rates. On the other hand, personal finances are under such strain at the moment, raising rates could create huge problems and so politically, some come commentators are also advising that the Bank of England will not raise interest rates until next year, much later than anticipated.

Among the lenders offering competitive fixed rate deals are (but beware the small print as there can be additional hefty charges or onerous conditions) :-

• Yorkshire building society with a 5 year deal at 3.99% with a 25% deposit.
• Chelsea building society have a 5 year fixed rate deal at 3.99% but with a £1,995 arrangement fee.