UK Residential Property

UK property transactions follow a distinct process called conveyancing, handled by solicitors or licensed conveyancers rather than real estate agents. The system differs fundamentally from US practice: no title insurance, different ownership structures, and a unique exchange/completion process. This slice covers England and Wales; Scotland and Northern Ireland have different systems.

The Conveyancing Process

UK transactions proceed through distinct phases: offer accepted, conveyancing begins, exchange of contracts, and completion. Unlike many jurisdictions, the transaction isn't binding until exchange of contracts—either party can withdraw without penalty before that point (known as "gazumping" if seller accepts higher offer, "gazundering" if buyer reduces offer).

Solicitors or licensed conveyancers handle the legal work: title investigation, searches, contract negotiation, and fund transfer. Estate agents (the UK term for real estate agents) market properties and negotiate offers but don't handle legal aspects. You choose your own solicitor; estate agents may recommend one but you're not obligated.

Searches investigate the property and surrounding area: local authority search (planning, building control, highways), drainage search, environmental search, and others depending on location. Searches cost £250-500+ and take 2-8 weeks depending on the local authority. Mining, flood, and contamination searches may be needed in certain areas.

Exchange of contracts is when the transaction becomes legally binding. Buyer and seller sign identical contracts, then solicitors "exchange" them (historically physically, now often by phone). At exchange, the buyer pays a deposit (typically 10%) and completion date is fixed. After exchange, withdrawal means forfeiting deposit or facing legal action.

Completion is transfer day. Remaining funds transfer, keys are released, and ownership changes. The gap between exchange and completion varies—often 1-4 weeks, sometimes same day. The process typically takes 8-12 weeks from offer to completion, but chains (linked transactions) can extend this significantly.

Ownership: Freehold vs Leasehold

Freehold means owning the property and land outright, indefinitely. Most houses are freehold. The owner is responsible for all maintenance and insurance but has complete control.

Leasehold means owning the property for a fixed term while someone else (the freeholder) owns the land. Common for flats. The lease is a contract specifying length, ground rent, service charges, and restrictions. When the lease ends, ownership reverts to the freeholder.

Lease length matters enormously. Lenders typically won't finance leases under 70-80 years; many require 85+ years. Under 80 years, extension costs increase dramatically due to "marriage value" rules. Buyers should treat anything under 90 years with caution—extension or lease purchase should be negotiated before buying.

Ground rent is annual payment to the freeholder. Historically nominal (£50-100), but some modern leases have escalating ground rent that can become onerous. Ground rents doubling every 10-25 years have caused significant problems. Legislation is changing to restrict ground rent on new leases.

Service charges cover maintenance of common areas in blocks of flats. Charges vary widely (£1,000-5,000+ annually) and can include building insurance, cleaning, repairs, management fees. Request 3 years of accounts and any planned major works before buying—special assessments can be substantial.

Commonhold is a newer ownership type (since 2002) for flats, where owners collectively own common areas. Rare in practice but may become more common as leasehold reform continues.

Stamp Duty Land Tax (SDLT)

SDLT is a transaction tax paid by buyers. Rates and thresholds change frequently—verify current rates for your situation.

Current residential rates (England and Northern Ireland): 0% up to £250,000; 5% on £250,001-925,000; 10% on £925,001-1,500,000; 12% on amount above £1,500,000.

First-time buyer relief: 0% on first £425,000 (for properties up to £625,000), then standard rates above that threshold. Must never have owned property anywhere in the world.

Additional property surcharge: Extra 3% on each band for second homes, buy-to-let, and properties bought by companies. Applies from the first pound. Refundable if previous main residence sold within 3 years.

Non-resident surcharge: Additional 2% for buyers who haven't been UK resident for 183+ days in the 12 months before purchase.

Scotland has Land and Buildings Transaction Tax (LBTT) with different rates; Wales has Land Transaction Tax (LTT).

Key Numbers and Costs

Deposit: 5-20% typically required by lenders. Higher deposits get better rates. Help to Buy schemes (now closed to new applicants) and Lifetime ISAs can assist first-time buyers.

Typical transaction costs for buyer: Stamp duty (varies), solicitor fees (£1,000-2,000), searches (£250-500), survey (£300-1,500), mortgage arrangement fee (£0-2,000), valuation fee (often included by lender). Budget 3-5% of purchase price for costs excluding deposit.

Seller costs: Estate agent fees (1-3% + VAT), solicitor fees (£750-1,500), EPC if not current (£60-120), any lease-related costs.

Timeline: 8-12 weeks average, but chains can extend to 4-6 months. Cash buyers with no chain can complete in 4-6 weeks.

Surveys and Valuations

Mortgage valuation: Lender's basic check that property is worth the loan amount. Often done remotely now. Not a survey—doesn't assess condition.

Condition Report (Level 1): Basic visual inspection, traffic light ratings. Suitable for modern properties in good condition.

HomeBuyer Report (Level 2): More detailed inspection covering major issues. Standard choice for most purchases.

Building Survey (Level 3): Comprehensive investigation, essential for older properties (pre-1900), unusual construction, or properties needing significant work.

Get a survey. Valuations alone miss condition issues. Surveys cost £300-1,500 depending on property size and level—small price compared to undiscovered problems.

Financing and Mortgages

UK mortgages typically have shorter fixed-rate periods than US mortgages—2, 5, or 10-year fixes are common, after which you revert to the lender's standard variable rate (SVR) or remortgage. Lifetime fixes exist but are rare and expensive.

Loan-to-value (LTV) affects rate significantly. Best rates at 60% LTV, good rates at 75%, higher rates and limited options above 90%. 95% LTV products exist but with higher rates.

Affordability assessment goes beyond simple income multiples. Lenders stress-test at higher rates to ensure affordability if rates rise. Typical maximum around 4.5x income, sometimes higher for high earners.

Decision in principle (DIP): Initial indication that a lender would likely approve your mortgage. Not binding but useful for making offers. Soft credit check usually.

Mortgage offer: Formal approval after full application and valuation. Valid for 3-6 months typically. Most offers are portable if you need to change property.

Common Misconceptions

"Offer accepted means I've bought it." Nothing is binding until exchange of contracts. Either party can withdraw, and gazumping (seller accepting higher offer) happens, especially in hot markets.

"I only need the lender's valuation." The valuation protects the lender, not you. It doesn't assess property condition. A proper survey can identify issues worth thousands or help negotiate price reductions.

"Leasehold is fine as long as there's plenty of time left." Under 90 years needs attention. Under 80 years is problematic—extension costs jump significantly due to marriage value. Under 70 years may be unmortgageable.

"Ground rent is just a small annual fee." Traditional ground rent is nominal. But modern leases may have escalating ground rent that doubles every decade or is linked to inflation—these can become seriously onerous.

"Chains always collapse." Chains add complexity and risk, but most complete successfully. Good communication, realistic timelines, and flexible completion dates help. Being chain-free (no property to sell) is an advantage.

"Cash buyers get big discounts." Cash buyers offer speed and certainty, which has value. But most sellers care primarily about price. A strong financed buyer with mortgage offer in hand may compete effectively.

Scotland and Northern Ireland

Scotland uses a different system: solicitors often act as estate agents, bidding is sealed and blind, and the transaction becomes binding much earlier (at "conclusion of missives"). Different timelines, different tax (LBTT), and different property law.

Northern Ireland follows English law more closely but has some differences in searches and procedures. Uses UK SDLT rates.

When assisting with Scottish or Northern Irish transactions, note these differences and verify jurisdiction-specific rules.