If you are involved in the process of buying, selling, transferring or remortgaging property, then you may be wondering what additional costs could come up during conveyancing.
Whether you choose to pay to instruct a conveyancer or solicitor or manage the property yourself, there are other costs associated with the conveyancing process known as disbursements. “Disbursements” is the word used in conveyancing for expenses that you will need to pay on top of your basic legal fees.
Disbursements that you will likely encounter include registering a property with HM Land Registry and conveyancing searches.
Your property transaction may also be affected by tax, such as Stamp Duty Land Tax or Capital Gains Tax.
This blog will look at what disbursements are, as well as when they apply and how much they cost.
What are conveyancing disbursements?
Conveyancing disbursements are expenses incurred during the property transfer process, beyond your solicitor's fees.
These costs typically include expenses such as land registry fees, search fees (for local authority, environmental, and drainage searches), stamp duty land tax, and sometimes additional costs such as Capital Gains Tax.
While solicitor fees cover the legal work, disbursements cover the administrative and third-party costs associated with the conveyancing process.
Understanding disbursements is crucial for both buyers and sellers to anticipate the total costs involved in property transactions accurately.
It's advisable for individuals engaging in conveyancing transactions to discuss disbursements with their solicitor to avoid any surprises during the process.
What disbursements are involved in buying a house?
Several disbursements are typically involved in buying a house. A local authority search is obtained from the local council which provides important information on planning applications, building control data, rights of way and local restrictions. This search is required for mortgage approval as most mortgage lenders won’t agree to lend without it, or without appropriate indemnity insurance.
A water and drainage search from the local water board is generally required by lenders as it has essential information about water supply, waste disposal and sewer connections.
An environmental search, which can be sourced from a search provider, assesses factors such as flood risk, ground stability, and contamination, offering insights into potential environmental issues.
A Land Registry Fee will need to be paid by your solicitor on your behalf, to register the property and Stamp Duty Land Tax is levied by the government on property purchases exceeding a certain threshold in England.
While not all of these searches and surveys are a requirement, they can prevent issues from arising further down the line. Your solicitor will be able to advise you on which disbursements will apply in your situation.
What disbursements are involved in selling a house?
When selling a house, several disbursements may arise. The seller typically incurs a fee for obtaining an official copy of the title deeds from the Land Registry.
If there is a mortgage on the property, the seller may also need to pay a fee to obtain a redemption statement from their mortgage lender, detailing the amount needed to pay off the mortgage upon completion of the sale.
There may be other administrative costs associated with the conveyancing process, such as bank transfer fees for transferring funds to pay off the mortgage or fees for ID or bankruptcy checks.
It is advisable to budget for any additional disbursement fees that may come up during the selling process.
How much are conveyancing disbursements?
Local authority searches can cost up to £250, and examine council records for planning permissions, land contamination, and local development plans.
Environmental searches, cost around £60 and address concerns such as flooding and subsidence.
Drainage searches, approximately £50, ensure property connectivity to fresh water and sewers.
Land registration fees vary between £20 and £1,105, covering the registration of new property owners.
Stamp duty, a tax paid when purchasing a home, increases with property value on a sliding scale. However, lower value properties are exempt from this tax.
How is Stamp Duty Land Tax calculated?
Stamp Duty Land Tax is required for property or land purchases above a certain threshold.
This applies when buying freehold or leasehold properties, participating in shared ownership schemes, or exchanging land or property for payment, such as through a mortgage or purchasing a share in a house. Below the threshold, no Stamp Duty Land Tax is applicable.
Current thresholds are £250,000 for residential properties, £425,000 for first-time buyers of residential properties valued at £625,000 or less, and £150,000 for non-residential land and properties.
The amount of Stamp Duty Land Tax depends on property use, eligibility for relief or exemption, and buyer circumstances, such as being a first-time buyer or owning multiple properties.
It's advisable to use a Stamp Duty Land Tax calculator or consult with a solicitor to accurately determine the stamp duty land tax payable on a property purchase.
Get in touch with our conveyancing disbursements solicitors
If you are buying or selling a property and you would like to speak to one of our expert conveyancing solicitors, we will be happy to hear from you.
We offer a range of flexible fees for our conveyancing services in Norwich. This includes fixed fees for straightforward work, giving you a clear indication as to how much you will need to pay from the outset. If additional fees are required to complete your transaction, your solicitor will let you know.
Please give us a call or fill out our online quote form and we will contact you shortly.
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