Conveyancing:
A Guide to Buying
a New Home
We take the view that the purchase of a new home is an exciting prospect - an opportunity for a fresh start or a renewal. At Benest & Syvret, this is supported by a diligent and efficient approach to the legal formalities.
To assist you in the home buying process Benest & Syvret have produced this Mortgage & Jersey Stamp Duty Calculators together with our guide to smooth the process and help you avoid some of the common pitfalls that we have witnessed over the many years of assisting local families in buying and selling their homes.
Download and print our Conveyancing Brochure (PDF)
Jersey Stamp Duty Calculator
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Page top Deciding your Budget
Clearly before you embark on looking at new houses you need to determine what you will be able to afford. Our advice in any property purchase is to approach a mortgage lender in the first instance to identify the amount of a mortgage that your budget will reasonably support. An offer made from a potential buyer who has already had a mortgage approved in principle will be far more tempting to a vendor then one from a purchaser who has not yet considered those arrangements.
In calculating the budget you will need to think not only about whether you can service the ongoing mortgage costs from your lifestyle budget, but also about how you are going to pay for the costs of the move. These include the costs of a valuation or surveyor's report, stamp duty, the bank's arrangement or administration fee, the bank's lawyer's fees, house insurance costs, life insurance costs, legal fees and the like.
Use our Mortgage & Stamp Duty Calculators to help you determine the likely monthly repayments as well as the fees and charges you can expect.
Our conveyancing staff will however be happy to provide you with a detailed breakdown of all of the other legal costs that you would incur on a given price range so that you may prepare your budget in advance. We are happy to provide a free consultation in respect of the costs to assist you. Simply call our conveyancing staff to arrange a suitable time.
Page top Choosing the Right Property
There are many different criteria that each of us will apply in choosing a home. In our experience the two key weapons in a house buyer's artillery are patience and a willingness to see as many properties as possible! Do not be tempted to compromise on a property that will not suit your needs in the long term. New properties come to the market everyday and eventually you will find something that suits both your budget and needs.
- You will need to stay in regular contact with the estate agents to ensure that they think of you first when a suitable property comes to their attention. Regularly properties are sold to applicants already registered with the estate agents without being advertised.
- Be prepared to go and see a number of properties before making your selection. Not only will this give you an idea of what is available on the market but it will also give you an idea of the kind of property that your budget will purchase.
- As a buyer you do not get to choose your estate agent. You must deal with the agent appointed by the vendor to sell his property. You do not however pay a fee to the estate agent. It is the vendor who pays that fee, usually at the rate of around about 1.5%. All negotiations as to price and terms for the sale will be via the estate agent rather than the vendor. Do not be offended that the vendor does not wish to speak to you directly. It is perfectly normal practice.
- Occasionally you may see private adverts for properties. Do not be put off by the fact that they are being sold privately, such adverts can produce a property which represents excellent value!
- It can be difficult to see the potential in a property which is dilapidated or in a poor state of decoration. Remember that internal decoration can be changed, and indeed will need to be changed or renewed over the years that you occupy the property. Structural alterations however are not as easy to complete and will require the assistance not only of builders but surveyors and potentially the Planning Department. If you decide on any structural alterations before you purchase a property you should advise Benest & Syvret accordingly so that restrictions as to any potential changes can be identified before completion.
- Do not be afraid to ask the estate agent or the vendor to visit the property on more than once occasion. Take the opportunity to visit the property at different times of the day so that you can assess how changes in light or noise may affect the property. Equally do not be afraid to approach neighbours and make enquiries as to the advantages or disadvantages of the neighbourhood.
- The Island of Jersey has seen many new homes built over the last few years. Developers of new homes will sometimes be able to provide warranties or guarantees as to the structural soundness of the property and the appliances that are installed. Equally there may be an advantage in terms of price in buying the property "off plan", that is to say before the building works are actually complete. A detailed agreement in terms of specification and finish of the property will need to be agreed but at Benest & Syvret we are experienced in dealing with these kinds of transactions.
Page top Putting in an Offer
By the time you have come to put in an offer for a property that you wish to purchase, you should have seen a number of other similar properties so as to give you a fair guide as to the appropriate market price. You should also take into account:
- How much the particular property means to you
- How unique the property is and whether a similar property may come on the market in the near future
- The risk of somebody outbidding you and leaving you disappointed
Even if an advertisement suggests that the asking price is "firm" do not be afraid to attempt to negotiate. A property never has a fixed price. Take your time when considering the offer that you wish to put in. Decide whether you want to start at your best possible price or allow space for the offer to be increased. Add weight to your offer by confirming where appropriate that you have already engaged a lawyer and that your mortgage is approved in principle. If you are a cash buyer with no chain of transactions attached to your offer this will be attractive to the person selling.
Page top Applying for your Mortgage
In addition to the usual lending banks, there is a wide selection of mortgage brokers in the Island. It is important that you choose a reputable and established broker who will be able to provide you with sound financial advice. Above all shop around to ensure that you receive the best offer. The variety of mortgages available is bewildering and outside the terms of this guide. Do however ask detailed questions of the mortgage broker or bank to ensure that the particular mortgage that they propose to you is tailored to your specific needs. In approaching a bank or broker to make an application we would suggest that you have to hand at least the following:
- Photographic proof of identification such as driving licence or passport.
- Confirmation of your residential address by way of original utility bill or similar.
- Copies of your bank statements for the last three months.
- Copies of your payslips for the last three months.
- If you are self-employed copies of your business accounts for the last three years or since the inception of the business if less than three years.
- Details of the property that you wish to buy as prepared by the estate agent.
The bank will need to know who is to represent you in respect of the purchase. Provide them with the address and contact details at the end of this guide.
Page top Valuation/Surveys
You will always need a survey of the property that you are to buy. As a purchaser you will want to be certain that the value of the home equates to the offer that you have made for it. The bank will also want to make sure that the value of the property provides sufficient security for the mortgage. Essentially there are three types of survey:
- Valuation Report This is the most basic report which simply provides confirmation as to the value of the property and is principally used by the bank to ensure that there is sufficient value in the property to discharge the mortgage if it were sold. Whilst this will be the cheapest of the reports available it will not provide you with any peace of mind as to the structural integrity of the property or any problems that may arise in the future.
- Homebuyer's Report This is the middle of the range option. It will provide you with a general report as to the condition of the premises and may provide some practical pointers as to the repairs that should be carried out. If some repairs are required, the bank may make it a condition of the mortgage that the repairs are carried out within a number of months of the purchase. It will also provide an accurate valuation of the property which will be relied upon by the bank.
- Full Structural Survey As the title suggests this provides a full and detailed report as to the condition of the premises. This is generally only appropriate when you are buying an older property. The survey will give you guidance as to the likely repairs that you are to be faced with during the course of ownership. This type of survey is usually tailored to specific purchasers' needs. If any damage to the fabric of the property is going to be caused by undertaking the survey, the prior agreement of the vendor will also be required.
You should note that you cannot rely on any survey or valuation that is prepared for and addressed to your bank; only your bank can rely on that report for its own purposes. If you wish to rely on the surveyor's report in the future you must discuss this with your surveyor at the outset.
Page top The Mortgage Offer
Once the terms of the mortgage have been agreed the bank will send you a letter known either as the "Offer Letter" or the "Facility Letter". This letter will set out the key factors of the mortgage namely:
- The period over which the loan is to be repaid.
- The monthly repayments at the outset of the loan.
- The interest rate that will apply, including any agreed period for fixed interest rates or the like.
- The penalties or administrative charges that will attach on repayment of whole or part of the mortgage.
- The security or mortgage arrangements that the bank's lawyers will require.
- The administrative or arrangement fee that the bank will charge you.
- Details of the bank's lawyers fees for preparing the legal documents which secure the mortgage over the property.
The offer letter is therefore a crucial document which you should read carefully to ensure that you are satisfied with its contents. If any part of it is not agreed, or you do not understand it, you should refer the matter to your bank and/or obtain legal advice. Until such time as the offer letter is signed and returned to the bank, the bank will not instruct their lawyers to prepare the mortgage documentation. Often this is overlooked and can lead to a delay in completion.
Page top Conveyancing Process
Conveyancing is the term used to describe the legal work involved in the transfer of ownership of the property from the vendor to you. This is the principal part of the work that Benest & Syvret will undertake for you. It is important that you are able to communicate with your advocate, solicitor or conveyancer in a language that you can understand.
How then do we transfer ownership of land from one person to another in Jersey? Unlike the United Kingdom the Public Registry does not give a simple certificate of title describing the boundaries and the rights which attach to the property upon application by vendor and purchaser. Instead the vendor employs a lawyer to draw up a contact between the vendor and purchaser. That contract has for many years been in French and only very recently has changed to be in English. The essentials of the contract however remain the same and set out:
- The parties to the contract, that is to say the people, buying and selling, and whether an Attorney is appearing on their behalf.
- A record of what the transaction is, that is to say whether it is a gift, sale or lease for a fixed period.
- How the property is to be owned by the new purchaser, for example, in his sole name or jointly with another. If the latter, is it "jointly for the survivor" which is the normal case for a husband and wife purchasing, or more rarely jointly in divided shares whereby each joint owner has a power to sell his interest in the property without recourse to the other.
- A description of the property including all of its boundaries, measurements for boundary stones or, in more recent times, description of GPS points identifying the limits of the area to be sold.
- The rights and duties which attach to the property. These will include:
- Rights of way;
- Rights of access;
- Rights for openings, such as windows towards neighbouring properties;
- Rights to enclose with fences or walls;
- Rights for services such as drains and electricity;
- Restrictions on use of the property;
- The price or terms for the sale. This will be important for the purposes of calculating the stamp duty payable.
- Title to the property and its provenance;
- Very recently a requirement has been imposed for the attachment of a plan identifying the location of the property to be sold.
Once the vendor's lawyers produce the draft contract and site location plan it is sent to Benest & Syvret for checking. We will examine the contracts and transactions that have been registered in the Public Registry in relation to the property over at least the last 40 years to ensure:
- Firstly that the vendor has good title, that is to say that he owns all of the property that he is purporting to sell.
- That the description of the property tallies with the description contained in the previous contracts.
- That there are no mortgages secured against the property which need to be discharged before the property is purchased.
We will also send out search letters. The standard search letters issued are as follows:
- Jersey Electricity;
- Jersey Water;
- Jersey Gas;
- Public Services Department;
- Parish Hall;
- Planning and Environment.
Planning and Environment provide a response which traces back the Planning history of the property to 1980. Planning consents may contain conditions which attach to the property and will therefore bind the hands of new owners. The restrictions can have a significant impact on the way that the property can be used or divided up and therefore are very important in considering the value of the property.
In some instances, particularly on residential investment purchases it is appropriate to make a search of the Rent Control Tribunal to advise whether any limits on the rental levels have been imposed.
Armed with the information obtained from the draft contract received from the vendor's lawyer, the searches of the Public Registry and the searches of the various States' bodies and utility companies, we will then attend on site. The site visit is intended to deal with the following matters:
- Boundaries – ensuring that the property that appears on site tallies with the description in the draft contract of sale and in the Public Registry.
- Planning – to inspect the property to ensure that nothing has been built that does not appear on the Planning search or file. You should note however that we do not undertake an internal inspection in this regard.
- Services – to check that the routes of the services such as electricity or gas as described on the search replies provide a direct connection to the property or in the alternative that the necessary rights for cables or pipes are in place.
Once all those checks are complete we will contact you to arrange a time to meet to go through all of our research. We will also go through with you the mortgage arrangements and advise you in relation to the terms of the mortgage documentation.
Page top Completion
Contracts in respect of sale of properties need to be passed before the Royal Court on a Friday afternoon. You can attend personally to pass that contract or you can appoint someone from Benest & Syvret to attend on your behalf under what is known as a Power of Attorney. On the same day as the purchase of your property your mortgage is registered before the Royal Court. Prior to proceeding to Court we will need to receive from you the balance of the price of the property over and above the amount of the mortgage plus the stamp duty and other fees which are payable in respect of the contract and mortgage.
The financial side of the transaction is completed on the Tuesday following the Friday in Court. We will receive from the bank the amount of your mortgage which will be paid over to the vendor's lawyers together with the balance of the purchase price which you will have paid to us previously. You will however receive the keys to the premises at completion of the contract on Friday afternoon and the property will be in your ownership at that time. You will therefore need to ensure that insurance for the property is in place in time for completion.
Page top Flats or Apartments
The purchase of a flat in Jersey can be by way of flying freehold or by way of share transfer. If the purchase is by way of flying freehold the process is exactly the same as the house buying process that we have described above.
If you are buying by way of share transfer you will be buying a block of shares in the company which owns the freehold of the property. That block of shares will give you exclusive right to occupy the flat in question and will impose duties to contribute to the maintenance of the overall property. In addition to the checks outlined above in relation to the whole block of flats we will also check the good standing of the company by reviewing the company's statutory records and making a serach at the Jersey Financial Services Commission. The advantage of a share transfer purchase is that the completion does not have to go before the Royal Court and therefore can be done on any day of the week.
Page top Housing Qualifications
You will not be entitled to purchase real property in Jersey unless you are residentially qualified under the terms of the Housing (Jersey) Law 1949. The terms of the regulations are presently under revision and it is always best to seek specific advice if you are uncertain as to the extent of your qualifications. Over and above those qualified under the usual 1(1)(a)–(h) regulations Benest & Syvret have considerable experience in dealing with applications for clients qualified under Regulation 1(1)(j), that is to say essentially employed residents and 1(1)(k), that is to say residents admitted to the island on social or economic grounds. In particular in relation to 1(1)(k) applicants we provide a full service in respect of the originating application to the Minister for Economic Development and the Housing Minister.
Page top Moving House
As part of the negotiations towards the purchase of the property you should agree a date with the vendor for "vacant possession" that is to say the date upon you will actually get keys to the property. Unless this is specifically negotiated the keys will be provided to you in Court on the Friday afternoon after the contract has been passed. On some occasions however vendors prefer to have the certainty that the contract has been passed before moving out of the property and will therefore ask for a period of grace after the passing of contract. Benest & Syvret are happy to assist in those negotiations if necessary.
It is important however to have a fixed date so that you may give appropriate notice to your landlord if you are renting a property at present. Equally you will need to book a removal firm and make arrangements for packing and storage as appropriate.
You will also need to contact a significant number of local authorities and services to notify of your move and provide a transfer of utility services. Benest & Syvret produce an exclusive "On the Move" package providing a useful collection of forms and information to assist you in this aspect of the move which is available to clients on request.
Page top Insurance and Wills
At the time of the purchase of your new home the property will need to be insured for its full reinstatement value. Shop around for the best quote dependant on your needs. Remember that you need not insure for the full purchase value, simply the costs of rebuilding the structures and contents on the site. A discount can therefore be made for the value of the site alone. Ask for the advice of your appointed insurance broker as to the appropriate value.
We also strongly recommend that you make or change your wills at the time of any property purchased so as to ensure that they are up to date. Benest & Syvret provide a service for tailor made wills details of which can be found in our Making a Will section.
Please contact us for an initial conversation, to arrange a meeting or for more information on how Benest & Syvret can assist you with buying or selling your home.
This guide is intended to provide outline details only and should not be considered as a substitute for specific legal advice. Disclaimer.