Legal Processes & Legal Fees - Buying a New Build (Part 2)

(Continued from Part 1)

If you are taking a mortgage for a UK property, most banks will expect the borrower to bear the legal fees involved for the loan conveyancing. In recent purchases, our decision on the choice of solicitors is often motivated by the financing bank’s policies on legal fees.

If you are taking a GBP loan from a UK financier, such as Lloyds, RBS, Bank of East Asia (UK) etc, the majority of solicitors in the UK can represent you for the purchase, as well as act for the bank for the loan conveyancing. You will then incur one set of legal fees, although there will be a top up required for the loan conveyancing.

In recent years, Singapore banks have begun to offer loans, both in SGD and GBP, for the purchase of London properties. This has opened more opportunities for Singaporeans to enter the London market.

Singapore banks lending for London Properties

Singapore banks generally expect borrowers to bear the legal fees associated with the loan conveyancing work. Each bank however has their own policies as regard the suitability of solicitors. Some banks have a fixed panel which they allow for the conveyancing work; whereas other banks may allow the developer’s recommended solicitors to undertake the loan conveyancing work.

Avoid Incurring 2 Sets of Legal Fees

Do check on the bank’s requirements on legal work and the appointment of solicitors. This is because, you may end up incurring two sets of legal fees if there are two different solicitors involved. For example, you may have appointed Solicitor A for the purchase of the property. However, Solicitor A may not be on the financing bank’s approved panel, and the financing bank may insist that only Solicitor B may be appointed for the loan conveyancing work. In such a scenario, you will end up bearing two sets of legal costs, searches and disbursements.

We experienced this scenario, of having two lawyers involved in our most recent completions. We went with Cavendish Legal because they were the developer’s recommended solicitors, and the developer provided a legal incentive only if we elected to appoint Cavendish Legal. We sorted out the financing parts only later, and realized that Cavendish Legal was unfortunately not on the bank’s approved panel and could not undertake the loan conveyancing work. 

A second legal firm represented the bank, and we had to bear the legal costs. It was slightly stressful during the run up to completion as there were two lawyers involved, and paperwork such as the legal charge and completion statements had to be sent from one lawyer to another. That said, the two lawyers involved, i.e. Cavendish Legal and Kingsfields Solicitors, were relatively efficient.

It would generally be more cost-effective to appoint a single solicitor to undertake the purchase and top up slightly for the solicitor to process the loan conveyancing. It is also neater and faster to deal with a single legal firm. Henceforth, this will be our preferred option.