The Buying Process made simple
1. Identifying a property & paying a holding deposit
Once you have found your property, you pay a 2% deposit to the estate agent who holds this money in Escrow. The enables the property to be taken off the market. The 2% deposit is later deducted from the purchase price and is refundable if you decide not to proceed.
2. Investigating title & exchanging contracts
The next step is to instruct lawyers who carry out a search at the Land Registry to check the title to the property, any restrictions, impending developments that may be nearby, current mortgage and charges against the property etc.. Preliminary Enquiries Before Contract are also sent to the vendor’s solicitor to ask for clarity on a wide range of points such as building alterations, planning consent, Energy Performance Certificates, Warranties/Guarantees in place, knowledge of problems with neighbours, property issues etc. . The gathering of all this information is to protect your interest and make sure you understand what you are buying fully.
The purchase agreement is drawn up by the vendor’s lawyers and sent to your Lawyer for approval. This agreement sets out the purchase price and the terms and conditions under which the property is being sold. Until a purchase agreement is signed, negotiations take place on a “without prejudice” and on a “subject to contract” basis. This means that until both sides have signed the agreement, no binding contract is made for the sale of the property. When in the contract is signed by both sides it is is known as “exchange of contracts”.
Once this is done, both parties are duty bound to complete thesale/ purchase. If either party default, the defaulting party is liable for all the costs and consequences of pulling out and not going through with the sale.
If a purchaser or vendor pulls out before exchanging contracts, he/she is not generally liable to the other side. However, if a holding deposit has been paid to an estate agent, they may be entitled to retain a proportion of this. This largely depends upon the terms under which the deposit was paid to the estate agent. Most estate agents ask buyers to sign a memorandum of sale or a reservation agreement. Buyers should read the terms of these carefully and ask their lawyers to review them before signing.
A Deed of Assignment, for a leasehold, or a Deed of Conveyance for a freehold property is then dranwn up . This deed is approved by all parties to the transaction and may include the management company of an estate and the original developer. This deed is the document by which the buyer becomes the owner of the property.
The buyers Lawyer will provide a Completion showing details of the purchase price to be paid, the amount of money being advanced by a bank or building society and stamp duty and registration charges payable to the government. At this stage lawyers ask buyers to provide the balance of all required funds needed to complete the purchase of the property. These funds are paid into the lawyers’ client account and payment is made by them to the vendor’s lawyers.
If obtaining a mortgage, the funds will be requested from the bank or building society by the buyer’s lawyers. Buyers only need to provide the balance of the required monies over and above the amount of the mortgage advance. Once the deed is executed by all parties and the purchase price paid, the original historic title documentation and the keys to the property are handed over to the buyer’s lawyers.
4. Registering the deeds & paying stamp duty
It is important to know that all properties purchased for £200,000 or less are exempt from stamp duty. If the buyer is a first or a second time buyer, the threshold is £260,000 to be exempt from stamp duty. In all other cases, stamp duty needs to be paid to the Gibraltar Government. Please see our Stamp duty calculator and our summary sheet of current stamp duty charges.