In March 2022, U.K. house prices increased rapidly since 2004, supported by a strong labour market and low mortgage rates, but experts warned of a slowdown in the months ahead as inflation rises. In the three months to March 2022, home prices grew in all regions of the U.K. except Wales and Northern Ireland.

However, the rising cost of living, interest rates, and higher house prices mean buyers who waited for affordable homes missed out on an opportunity in 2020-2021, and they may now find it difficult to get the same price.

Essential House Purchase Documents

Owning a house is a complex task, so it is important to know some key points. 

Initial Steps  

You will have to appoint a solicitor or conveyancer to complete the initial paperwork. Then, you need to search for the property as per your requirement, and after viewing and selecting a property, you may apply for a mortgage. For mortgage, you need to arrange for other important documents, like you will have to fill in information related to KYC.

Solicitors will try to get your details through 'Know Your Client' or 'KYC'. However, government rules mean you have to prove your I.D., especially when you are a new client. For U.K. residents, for proof of identity, you need to present a passport copy, a photo driving license, or other I.D.s. 

Along with your I.D.s, you will need proof of address. You can submit the bank or building society statements, council tax bill, electoral register, tax documents, or utility bills to support your contact details. In addition, you need to give your credit report to improve your chances of getting a mortgage. 

You need to see if you have some savings that can be offered as deposits to get you a mortgage in principle in the preparation phase. 

Suppose any lender approves your mortgage application. In that case, you can get the formal confirmation. The broker will carefully see the above documents and other documents related to earnings and expenses and move your proposal to the seller. 

Receipt Of Stamp Duties 

The buyer will have to calculate the stamp duty land tax (SDLT), and they need to keep some extra cash for it.

Form Of Attachments As Well As Belongings 

Your conveyancing solicitor ensures the purchase of the property should be completely legal, so when the home is transferred in your name, no one can challenge your ownership. They will see that you sign all needed documents and handle all the tax, insurance and money transfer bills. 

They will also conduct 'property searches' to assess the home's market value to ensure you are not paying more than the current market rate. They also try to confirm the conditions of ownership - freehold or leasehold, the boundaries, and other obligations. Unless the property is newly built (or under construction), you will need a surveyor to check for problems. 

The Rental Report

Your attorney can supply you with a replica of the contract and any estimates or predictions, including its processing fee when the property is leased. A convincing rental report can help you know more about how to acquire rental homes. 

Reimbursement Coverage 

You can get a replica of a contract insurance coverage, as per the recovery reimbursement directions, or other legal protection. 

If your survey finds some significant issues that could be costly to fix in the later stages, you can renegotiate the asking price with the seller. You may be able to renegotiate a lower rate, where you could recover the cost of the survey.

Energy Efficiency 

You require an EPC report that explains whether your house or apartment is energy-efficient or not. The report considers things like how well the property is insulated, and it will tell you how much your bills might cost. It also recommends improvements to save you money, and if the new home is not energy efficient, you may have to pay to deploy it.

U.K. House Prices Rising Steadily, Despite Pandemic

Annual growth in the U.K. housing market was at its fastest rate in 18 years in March 2022, hitting 14.3 per cent, up from 12.6 per cent in February 2022(as per Nationwide reports). The growth rate was more than the 13.5 per cent predictions made by Reuter economists' surveys.

Nationwide's representatives claim there has been a continued "buoyancy" in the U.K. housing demand, partly explained by strong labour market conditions and the high household savings accumulated during the lockdown and low mortgage rates.

The price of a typical U.K. home grew to a record high of £265K, reflecting an increase of £33K in the past year. The average cost of a house was 21 per cent more than before the pandemic hit in early 2020. 

It is particularly the same situation for detached homes, which gained from strong demand for additional space to stay at home during lockdowns, and the culture of working from home.

The price of detached homes grew by almost £68K, or 22.6 per cent since the onset of the pandemic. Over the same period, the price of flats increased 14.1 per cent or about £24K. It means that it is becoming difficult for existing homeowners to trade up.

Is The Housing Market Slowing Down In The U.K.?

Home asking prices were 9.9% higher than 12 months ago in the first quarter of 2022. In the first three months of 2022, those prices have increased faster than during any other three-month period.

Average asking prices in the U.K. are even higher than in the U.S., where the median listing price is $405K, up 14% from 2021.

Despite three interest rate hikes that the BoE approved in February 2022 to counter inflation, U.K. home prices have continued to rise. 

The House Buying Process in the U.K., Present Days

Look For Accommodation 

You need to search for accommodation as per the pre-determined budget. House or flat -hunting is the most time-consuming stage where you need to see a lot of homes that may not be as good as you want, especially if you already have some idea of where you want to live.

Most buyers pay for the location, extra space, and rooms for children. They search for a house with better connectivity to the workplace, shopping centres and schools.

Calculate How Much You May Have To Pay – 

You need to know the maximum price you can offer, which depends on the amount you'll be allowed to borrow and the size of your deposit. You can use a  Mortgage Calculator to estimate it. The attorneys further assist you in getting a 'premise assessment' from an acceptable creditor, giving you the fixedness to hunt for something better. 

Set Up A Preview 

While you have found a house, it's important to schedule a preview. Many real estate agents provide both simulated and interactive viewing. Ask the other party to arrange a viewing time, whether you're conducting a property search through an agent or yourself.  

If possible, you should always view it in person and ask questions about the property's history, foundations, and anything else that may concern you, the seller or the agent. 

Search A Licenced Conveyancer

When you buy a home, you'll need a licenced conveyancer (who is usually a solicitor) to handle the legal aspect of the transactions. Nevertheless, mortgage lenders sometimes have a panel of conveyancers who can work with you. However, only a few solicitor firms are on such panels, so that you can hire a licenced conveyancer yourself.

Submit A Proposal 

If you want to buy, you will have to offer through the estate agent to the agent. The ideal offer is the lowest rate that you can pay. People get a "Choice in Presumption" that mostly implies that your borrower is ready to pay you up to the desired sum on the conveyed property purchase. 

Agreed On The Purchase 

The exchange of contracts takes two weeks, and after completing the process, you will have to pay for the stamp duty and other obligations. If the seller accepts your proposal, you will have to work towards exchanging contracts. Therefore, it's advised to calculate the approximate stamp duty land tax (SDLT) you'll need to pay on the property.

Initiate the Process of Convincing

A mortgage application takes at least three weeks. Still, if you already have a mortgage in principle and are in touch with a mortgage broker, you can apply for your mortgage once the proposal is accepted. But, first, you should instruct your solicitor to begin the conveyancing process. 

Insured Your Property

You can get an insurance policy to cover any risks. For example, buildings insurance is paid if your home suffers damage caused by fire. Your lender will insist that you get it, but you can buy it from another low-cost insurance seller. Ensure that your cover initiates on the day you exchange contracts.

It is good to receive insurance references for your house and quality reimbursement. Generally, you may not need self-insurance, but you can get it if you want more protection.

Sign The Agreement

You and the seller must agree on the date to sign the agreement in advance. It can be quite tricky to arrange, particularly if you are unsure of mortgage approval or other legalities. When the contracts are exchanged, the buyer needs to make a deposit, which can be 10 per cent of the total property price. When you are in the process of signing the agreement, the prosecutor will be there to instruct you.

Contractual Transaction

You will exchange contracts with your seller, and after signing the agreement, your solicitor will transfer your deposited money to the seller's solicitor. Then you will have to sign the transfer deed, which confirms the property is transferred to you.

The payment and the scanned documents shall be submitted to the seller's attorney, and then you get the legal right to the house. 

Fulfilment And Final Transfer Of Keys

Your prosecutor shall pay the seller's attorney the remainder of that same appraised value. When the payment has been made, the selling agent will contact the property owner, and they will send the keys. 

Paying Stamp Duty

The solicitor will ask you to arrange for stamp duty before completing transactions, but you get 14 days to settle this bill via a solicitor.

Register Ownership

One of the final steps is to register the house with the Land Registry; the fee can be £200 to £300. After registration, the property's title deeds are transferred into your name and forwarded to your mortgage lender.

Set The Moving Expenses 

Before exchanging contracts, you should plan for moving; as in the other stages, completions have to happen in succession. You need to set aside some funds for transfer and improvements in the new home. So removal companies can be booked up weeks before signing the contract to get the best rates. Many such businesses will offer you quotes depending on how many items you want to move.

Conclusion:

The housing market in the U.K. grew at the fastest rate in the last year. However, Nationwide data finds that earnings grew less than house prices during the lockdowns, pushing the house price-to-income ratio to an all-time high in the Q1 of 2022, while affordability remains a big concern for first-time buyers. Buying a house involves:

• Choosing a house.

• Selecting a conveyancer.

• Viewing the property.

• Getting a mortgage principle.

• Making an offer.

• Arranging for a survey.

• Taking out insurance and signing the agreement/ exchange of contracts. 

If you want to buy a house, you should prepare to go through the steps, where there are several transactions dependent on each other and in a chain.