We may be obsessed with home ownership, but one in six Brits has no idea about their rights and obligations when buying a home.
New research has revealed 45 per cent say they are “not sure” what a conveyancer actually does and 39 per cent don’t know whether they need one to buy or sell a home. Meanwhile, 38 per cent are confused about the difference between a leasehold and freehold property.
The survey of 2,000 Brits who plan to buy a home in the next ten years by property law specialist Slater and Gordon found one in six did not know what an exchange of contracts involved or whether this came before or after completing on a sale.
As the property market moves into its traditionally more buoyant spring market, the research found over 50 per cent of potential house hunters did not understand the phrase “gazumping” and were confused about whether it was legal.
Samantha Blackburn, property lawyer at Slater and Gordon, said: “Tens of thousands of Brits will be contemplating buying or selling a home this spring as the weather and the market warm up.
“With activity due to pick up in the market, it’s vital that buyers, especially first-time buyers, know their rights and have a basic understanding of the legal process.
“Buying a home can be confusing, time consuming and expensive. Misunderstanding the process and not getting the correct legal advice can not only delay a sale, it can also lead to increased costs for the buyer and also potential issues in the future.”
Seven in nine Brits misunderstand when they are required to pay the deposit on a home and 59 per cent don’t know when a sale is legally binding.
Four in ten Brits don’t know the difference between leasehold and freehold properties, while 13 per cent don’t realise a leasehold agreement could ban a pet or specify what colour you need to paint your property. Nearly a third did not know they would need to pay an annual ground rent to the freeholder if they purchased a leasehold property.
Samantha Blackburn, property lawyer at Slater and Gordon said: “A leasehold property and a freehold property are actually two fundamentally different forms of home ownership so it is important buyers not only understand that, but that they get appropriate advice.
“If you own the freehold, it means you own the building and the ground it stands on, although even with freehold there can be restrictions on what you can and cannot do with the property. Leasehold means you have a lease to use the property for a certain number of years. What many people don’t understand is that a lease can specify all sorts of restrictions and some of them are quite surprising.
"Most leases make the purchaser pay a rent for a property which has been purchased. This rent can sometime be increased every few years and the rental income is often sold to investors.
“Most flats are leasehold with the lease specifying a service charge to be paid to a management company and often there will be an annual payment into what is called a sinking fund to pay for future major works. These costs can be significant each year and affect the affordability of someone’s home. But there can also be other provisions that would surprise a lot of people and which may seem quite minor but can have an impact on a buyer’s future use of the property.
“A lease is legally binding document so it is vital buyers understand these rules and regulations before agreeing to a purchase.”
Eighteen per cent of Brits say they would not need specialist legal advice to buy a new build property, while 53 per cent said they weren’t aware of the extra complexities and risks were they to buy an off-plan property.
Samantha Blackburn, property lawyer at Slater and Gordon said: “Off-plan and new build properties can have an extra element of risk and complexity which a buyer should be fully advised of by their lawyers and so it is always worthwhile taking specialist legal advice to ensure your purchase protects your interests.”
Top Ten Confusing Property Facts
- 73% admit they know very little or nothing about the legalities of buying or selling a home
- 75% of Brits don’t know what a conveyancer does
- 77% don’t know when they are required to pay the deposit on a home
- 59% don’t know when a sale is legally binding.
- 38% don’t know the difference between leasehold and freehold property
- 32% don’t know that the owner of a leasehold property is required to pay ground rent to the freeholder
- 18% don’t understand the terminology “exchange of contracts”
- 16% don’t know what “completion” means when it comes to buying or selling a home
- 51% don’t know what gazumping is and 20% don’t know it is legal
- 61% don’t know what gazundering is and 17% don’t know it is legal