As leasehold transactions ie which involve taking or making an assignment of an existing lease, tend to be more complex than freehold, the additional procedures are reflected in legal costs. So the example below follows the purchase of a freehold save that the legal fee would be £995 (+ vat).
It should be noted that there are non-standard circumstances in which we cannot really provide a cost guide without speaking with you. Examples would be transfers of equity e.g. in divorce proceedings where the property is transferred from joint names into one of the parties’ name as part of the financial settlement, equity release, gifts of property, where is a brand new lease (as opposed to an assignment of a lease) or an extension of a lease term, and sales / purchases by auction
This example relates to a typical purchase transaction for your own occupation and covers all the work* required to complete the purchase, including dealing with registration at the Land Registry and dealing with the payment of Stamp Duty Land Tax (Stamp Duty) if the property is in England, or Land Transaction Tax (Land Tax) if the property is in Wales.
On a purchase of a leasehold residential property at £200,000 on the basis of the assumptions below
- Legal fee £995 + vat
- Fee for acting on behalf of the mortgage lender £nil (see Charges re Mortgages)
- Electronic money transfer fee £30 + vat (per transfer)
Disbursements are costs related to your matter that are payable to third parties, such as search fees. There are certain disbursements which will be set out in the individual lease relating to the Property. The disbursements which we anticipate will apply are set out separately below. This list is not exhaustive and other disbursements may apply depending on the terms of the lease. We will update you on the specific fees upon review of the lease document.
- HM Land Registry fee: £95
- Search fees: £335 + vat
Sub total £1727 inc VAT (but see caveat below)
Be aware that there are other possible disbursements on a purchase – these vary from property to property and can on occasion be significantly more than above. See below. And be aware that a possible disbursement on a sale could be the cost of obtaining the Landlord’s consent to an assignment of the lease as a formal Licence to Assign. We can certainly provide an accurate figure once we have sight of the specific documents.
Possible extra disbursements on a purchase:-
Notice of Transfer fee – The fee is set out in the lease. Often the fee is between £30 – £50
Notice of Charge fee (if the property is to be mortgaged) as per the fee set out in the lease. Often the fee is between £30 – £50
Deed of Covenant fee – if relevant, the fee payable is provided by the management company for the property and can be difficult to estimate. Fee to be advised once documents available.
Certificate of Compliance fee. Fee to be advised once documents available.
You should also be aware that annual ground rent and service charge are likely to apply throughout your ownership of the property. We will confirm the ground rent and the anticipated service charge as soon as this we receive this information.
FINALLY, DON’T FORGET THE TAX! SO ALSO ADD Stamp Duty Land Tax
The amount depends on the purchase price of your property and your personal circumstances (eg first time buyer, owner of other properties). You can calculate the amount you will need to pay by using HMRC’s website or if the property is located in Wales by using the Welsh Revenue Authority’s website. In this standard example, the stamp duty would be £1500.
Therefore GRAND TOTAL on purchase = £3227
- that it is a standard transaction and that no unforeseen matters arise including, for example, a defect in title which requires remedying prior to completion or the preparation of additional documents ancillary to the main transaction
- that this is the assignment of an existing lease and is not the grant of a new lease
- that the transaction is concluded in a timely manner and no unforeseen complications arise
- that all parties to the transaction are co-operative and there is no unreasonable delay from third parties providing documentation
- that no indemnity policies are required. (Additional disbursements may apply if indemnity policies are required).