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.

Legal Processes & Legal Fees - Buying a New Build

Legal Process & Fees

You will have to appoint a solicitor to represent you as the purchaser, when you buy a property in London. 

Know what you are signing yourself up for.

No Obligation to Go With Developer's Recommendation

The developer would usually (but not always) offer legal incentives. Developers would tie-up with a recommended solicitor, which may offer a pre-negotiated rate, for example, 1500 GBP. You are under no obligation to go with the recommended solicitor.  You are free to appoint your own solicitor.

Legal Fees Vary Greatly

The legal fees quoted by firms generally vary according to purchase price, i.e. you can expect a higher fee quote when you are purchasing a more expensive property, than for a less expensive one.

Beyond the fees quoted, you have to factor in other legal expenses, such as for searches and disbursements. These can easily come up to 1,000 GBP per transaction.

If you are taking a mortgage, you will usually be responsible for the bank’s legal fees for the disbursement of the loan. The legal firms will charge you an additional fee if there is a loan involved.

There is a huge range in the legal fee quotes we have received. We have seen quotes ranging from 500 GBP (internet-based lawyers) to 3500 GBP plus VAT for a 500K GBP transaction. 

You must appoint a solicitor whom you trust, because you will after all, be remitting monies through the solicitor.  It is important that the lawyers act in your interest, conduct the proper searches, pay your stamp duty, register the title deed etc. As such, it may be a good idea to go with a solicitor who has a decent presence.

Riseam Sharples

When we bought our first London property, we had absolutely no clue about the legal work involved. We went with the solicitors recommended by Colliers, which is Riseam Sharples. Since then, we had appointed Riseam Sharples for 3 purchases, even when Riseam Sharples was not the developer’s recommended solicitors.

 We have found Riseam Sharples to be extremely experienced with Hong Kong and Singaporean investors who are purchasing UK properties (both off-plan and stock). They can also offer tax advisory services. Here is their website:  http://www.riseamsharples.com/

The advantage of engaging Riseam Sharples is that one of their partners is often in the Far East, attending some property exhibition or other. They are also close to all the major sales agents like Colliers and JLL. You can thus drop by to have them verify documents such as identity documents and sources of funds face-to-face. 

The exchange of contracts and eventual completions were smooth with Riseam Sharples. They get the paperwork ready in advance. We have found them prompt in responding to emails, and clear in their communications. The legal fees are also reasonable.

Cavendish Legal Group 

The second firm we have worked with is Cavendish Legal Group, which we have recently completed three transactions with. While they are not as experienced as Riseam Sharples with Far East investors, we would say, this firm is very good value for money for the relatively low fees charged. The service is not at the same level as Riseam Sharples, but they do get the job done nonetheless. We did not feel that our interest had in any way been compromised.

Another friend of ours engaged PCB Solicitors for three transactions, and while the legal fees are not low, she was full of praises for their services.

(Continue to Part 2)

Life is not a bed of roses, neither is it a bed of flowers.