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Conveyancers more upfront about fees of buying a home

Thursday, 27 December 2018  |  Admin

The average upfront cost of buying a property in the UK is now more than £38,000. Will new price transparency rules help?

According to a new report by credit experts TotallyMoney, young people and other first time buyers face crippling costs when trying to take their first step onto the property ladder.

This includes things like

  • Deposits

  • Homebuyer’s Report

  • Surveys

  • Stamp duty

  • Property repairs

  • Solicitor costs

  • Mortgage and valuation fees

  • Removal costs

  • Building insurance.

Of course, there is little that solicitors can do to help with many of these costs. But, by being honest and upfront about their prices, conveyancers could help buyers to make more informed decisions about what they can and what they cannot afford.

New price transparency rules

The good news for homebuyers in England and Wales is that from 6 December, solicitors will have to publish their conveyancing fees on their website.

This should help consumers to shop around, compare the prices of legal services and cut costs.

The fee information must be published in a prominent location, be accessible, clearly signposted and easy for visitors to find and understand.

Beware of one-size-fits-all

While clearer pricing will help buyers, it's essential that people don't just opt for the lowest possible price. Not every property purchase is the same, and you'll want to be sure that you appoint a conveyancer that best meets your needs.

To help you make an informed decision, as well as fee information, the new rules also require solicitors who carry out conveyancing work to provide more comprehensive service information. This includes information on things like what services are and are not included for the quoted price, the typical timescales you can expect the services to be delivered and the qualifications and experience of anyone carrying out the work.

The new transparency rules have been introduced by the Solicitors Regulation Authority and the Council for Licensed Conveyancers. 

If you are a mortgage prisoner trapped repaying your mortgage at a higher rate than necessary, through no fault of your own, help could be at hand.

The Government has been called on to do more to help so-called "mortgage prisoners". Mortgage prisoners are homeowners who find themselves unable to remortgage, or find a lower interest rate, due to changes in legislation following the financial crisis.

Nicky Morgan, the Secretary for the Treasury, has asked for more to be done to help people trapped into poor mortgage deals, claiming that time is of the essence when doing so.

How did this situation arise?

Before the crash, hundreds of thousands of borrowers took out mortgages and made their monthly payments on time. But many are now unable to access a better deal because they don’t meet the strict new lending rules that were introduced in 2014.

For example, before the recession, some buyers were allowed to borrow eight times their annual salary. But with tougher affordability requirements now in place, this is no longer the case.

Unfortunately, many of these customers are now restricted to their agreed deal which could cost them thousands of pounds more than the average fixed-rate deal.

What is being done to help?

The Financial Conduct Authority (FCA) is able to help customers of active firms. And around 95% of the UK’s residential mortgage market has agreed to help these borrowers switch to a better deal.

But this doesn’t do anything for the 140,000 customers who have mortgages with "inactive lenders" who no longer issue new mortgages. This includes Bradford and Bingley and Northern Rock.

As such, Nicky Morgan has called on parliament to do more to find a solution which helps these homeowners access the best possible deal.

The Government is now said to be “exploring legislative solutions” to alleviate the issues facing thousands of mortgage prisoners.

Could Brexit help?

At present, strict European Union directives make it difficult for mortgage lenders to ignore the current affordability requirements when a homeowner is looking to move their mortgage to a new lender.

However, the UK’s departure from the EU could result in lenders being able to work outside of these mortgage rules.

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