Selling properties in Scotland
Solicitors play a more prominent role in selling homes in Scotland than they do in the rest of the UK. Many Scottish solicitors are also estate agents and will be involved in the marketing process as well as in the legal work.
Solicitors firms which are also estate agents are usually members of Solicitors and Property Centres. Property centres have showrooms which advertise available properties from members.
Estate agents also operate in Scotland but they have a lesser share of the market.
A solicitor will be the first point of contact for someone planning to sell. The Scottish contracts system is different from that in England and the contract is usually completed quickly.
The solicitor will take the following necessary preparatory steps when selling a property:
Property marketing: Checking the title when the property put on the market
Transactions: managing initial transactions
Documentation: sourcing all documentation relating to the home
Negotiation: negotiating the contract on your behalf with the buyer’s solicitor
Finalising your contracts
Your conveyancing solicitor will assist with every aspect of finalising your contracts:
Title deeds: your solicitor needs to get hold of your title deeds and check them
Land register: the solicitor will search the Land Register confirm the sale can go ahead.
Missives: your solicitor will draw up contract letters of negotiation, referred to as 'missives'.
Date of entry: you will agree a fixed date for the transaction to complete.
Paperwork: after the 'missives' are agreed, they will manage the paperwork involved in the legal transfer of the property
Buying homes in Scotland
You would still use a solicitor when buying a property, as they also negotiate deals. It's worth getting a solicitor early on in the process. As many work on a fixed fee basis, the timing rarely affects the cost.
There are a couple of steps to purchasing a property:
Making an offer
These are the steps you can take when placing an offer on a new house:
Conditional offer: you may make a conditional offer with a proposed date of entry. Your seller may return with a counter offer.
Surveying: some buyers consider having a property surveyed. However, due to the use of Home Reports in Scotland, you can see these details before making your offer. Many choose not to get a survey.
Formalising the agreement
When the seller receives a full conditional offer, they will send back the title deeds and search report, along with any other documents. The seller signs the transfer of the title deed. This is called the 'disposition'.
Mortgage: as the buyer you will need to arrange your mortgage. The seller’s solicitor will prepare the Land Transaction Return for you to sign.
Request of funds: the seller’s solicitor will request the funds from your lender and any other associated fees.
Your solicitor will arrange the payment for your Land and Building Transaction Tax.
Land and Building Transaction Tax
The LBTT is a charge on land transactions in Scotland. It is the equivalent of Stamp Duty in England, or Land Transaction Tax in Wales. LBTT falls into bands, depending on the value of your property. The differences between Scotland and the UK include:
LBTT Rates- the amount of tax you pay will depend on the price of your new property. If you are paying below £145,000 for your property, there is no tax.
Paying LBTT- LBTT is managed by Revenue Scotland with the help of Registers of Scotland (RoS). Any payments would go through them and not the HMRC.
Land and Buildings Transaction Tax bands
These rates are paid only on the part of the property price within each tax band:
0% on the first £145,000 paid
2% on the property price between £145,001 and £250,000
5% on the property price between £250,001 and £325,000
10% on the property price between £325,001 and £750,000
12% on property price above £750,001
For example, if you were buying a house in Scotland valued at £400,000 you would have to pay £13,350 in LBTT:
Nothing on the first £145,000
2% on £145,001 to £250,000
5% on £250,001 to £325,000
10% above £325,000
Buy-To-Let for Land and Buildings Transaction Tax
From April 2016 there has been a surcharge of 3% on top of your current LBTT if you buy a second home or buy-to-let.
Properties that have a value of £40,000 or less will not have to pay the additional LBTT.
LBTT percentage rate on a second property
Up to £145,000 - 3%
£145,001 to £250,000 -5%
£250,001 to £325,000 - 8%
£325,001 to £750,000 - 13%
Above £750,000 - 15%
Paying your LBTT
You can pay LBTT either by online or paper return. In most cases your solicitor will process this payment for you.
The home buying process in Scotland
Many find the process in Scotland to be a lot quicker than in the rest of the UK. This is partly down to Home Reports being available to the buyer before making an offer. This means buyers don't have to wait to arrange a survey, and sales aren't derailed by nasty surprises.
The other reason is that a conditional offer is a contract. This means there is no chance to of being gazumped or gazundered right at the end. Whilst the missives are being arranged you can back out. After that, often the injured party is awarded a payment by the person who broke the contract. This could be a significant amount so it is always worth being sure before entering into an agreement.