Buying a house in Scotland is slightly different from buying a
house in other parts of the UK. 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 principleBefore 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.
Sealed bidsIn 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.
CommitmentWhen 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.
SolicitorsBecause 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 mortgageAfter 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 surveyAlthough 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 offerAfter 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 missivesAfter 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.
SettlementAll 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 advice on
finding a suitable mortgage, you should visit Scottish Mortgages
for expert professional mortgage advice. Copyright 2004 David Miles. You are welcome to reproduce this article on your website, so long as it is published "as is" (unedited) and with the author's bio paragraph (resource box) and copyright information included. In addition, all links to external websites must be left in place.
About the Author
David Miles is the editor of a number of UK finance and property websites, including:
www.scotland-mortgages.co.uk
www.mortgages-remortgages.net