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Disbursements

Disbursements

Examples of hidden cost of buying a house

08/03/2017

Buying a house can be very expensive. The most obvious cost of buying a house is the actual price of the property. Most buyers get into conveyance with only this cost in mind. They fail to realize that there is one or more other hidden cost of buying a house. The result is that the buyer is confronted with bills he did not expect. The worst thing is that these additional expenses have to be paid from the buyers own pockets and not with loans or mortgages. It is important for any buyer to get into conveyance with sufficient knowledge of the expenses he will have to cater for.

Solicitors Fees

The very first cost of conveyance that you will be confronted with is the solicitor’s fees. Solicitors’ fees are payment made for the services of solicitors. Solicitors are experts in real estate transaction. They help buyers and sellers in exchanging properties. Property transaction cannot sail through smoothly without the input of solicitors. They help buyers and sellers draw contracts, perform property investigations and file relevant documents. They usually charge about 800.

Disbursement Fees

Search and Surveys Fees

The other cost of conveyance is the cost of property survey and valuation. Property survey help elucidate the cost of a property. The survey takes into consideration size, location and age of the property. A buyer cannot get a mortgage without having a valid property survey report. There are many types of survey reports. Each of these serve a different purpose and cost different amount of money. The most important one is the Standard Property Survey. It gives a brief account of the condition of the property and the possible market value of the property. The law requires that a buyer conducts at least the Standard Property Survey.

Land Registry Fees

As a new owner of the property, you need to change the legal ownership of the property at the Land Registry. Only after completing the process you will own the title dee of the property. You will need to fill up forms and pay the required land registry fees to make the transfer of deeds complete.

Stamp Duty Tax

Stamp duty land tax is the other hidden cost of conveyance. Stamp duty is like an income tax. Strangely, it is charged on the buyer rather than the seller who is indeed the recipient of the price of the house. Stamp duty is charged on any newly built residential home that is worth more than £125,000 or any other property that is at least £40,000. That is, if you are buying your first home, you will be charged a tax when your home is at least £125,000. If the home you are buying is the second or subsequent home, or when it is a buy to let property, taxation begins at house prices of £40,000. Stamp duty taxes, like income taxes, are grouped into various bands with each band having a different rate. The higher the price of your house, the more stamp duty you will have to pay.

Other Fees

You should also expect to pay mortgage arrangement fees. These are the cost of processing a mortgage. Mortgage arrangement fees vary from one lender to the other. Some of these lenders have refundable arrangement fees while others do not. The arrangement fees include mortgage application fees, mortgage broker fees and mortgage transfer fees. Other conveyance fees include estate agent fees and life insurance processing fees.

Types of disbursement when selling house

12/12/2016

Buyers and sellers encounter various kinds of disbursement fees during conveyance. The disbursement when selling house does not include solicitors’ fees. They are totally separate from solicitors fees and are individually much less than solicitor fees, but can cumulatively be more expensive than the solicitor fees. The disbursement fees are for other institutions or individuals who help the conveyance progress. The buyer or seller pays the fees indirectly through their respective solicitors. The number and amount of disbursement fees depend on the property on sale and the amount of documents required to complete conveyance. Solicitors usually include the expected disbursement fees in the initial client care letter that they send to a buyer or seller.

Official Disbursement Fees

The first beneficiary of disbursement fees is the Land Registry. Almost all property transactions involve paying some fees to the Land Registry. The fees are paid for title deeds, and title plans are made available by the Land Registry. Both the buyer and the seller need these documents and therefore have to pay the fees. The seller needs these documents to prove his claims as the authentic owner of the property and the buyer needs the documents to prove that indeed the seller is the owner of the property. It is the solicitor’s job to get the documents.

Registered titles attract additional fees apart from the fees for title deeds and title plans. This is because registered titles are protected by additional provisions that are spelt out in a separate document. The document, just like the registered title, is kept at the Land Registry. Registered titles are especially common with properties that are built by developers as part of larger estates. The cost of the title register and title plans is £14 while that of the document is £11. Solicitors used to physically present themselves to the Land Registry’s office to get the document. Currently, the document can be downloaded from the website of the Land Registry. A downloaded document is cheaper. Some solicitors pay the cost of the provisional document from their own pockets rather than bill it separately.

Taxes are another disbursement fee that is necessary expense before the purchase can go through. Many of these taxes like Stamp duty depend on the cost of the property. A buyers solicitor will also analyse if the seller has taxes or expenses due on the property.

Other Disbursement Fees

A seller can also look into Telegraphic Transfer fee. The solicitor charges these fees for the expenses incurred when transferring funds to the seller’s financial institutions. The institution charges solicitors the transfer fees and the solicitor consequently charges his client the same as disbursement fees. Telegraphic Transfer fee comes about when large sums of money are paid to cover for mortgages or when proceeds of property sales are transferred directly to a seller’s bank account through the Clearing House Automated Payment System (CHAPS). CHAPS transfers money to a bank account in one day. BACS transfer is slower compared to CHAPS.

Some solicitors may take advantage of their clients and charge disbursement fees that are higher than the Telegraphic Transfer fees. They can do this since clients never really know the cost of the transfer. The transaction is between the solicitor and the bank. Solicitors who overstate the Telegraphic Transfer fees breach the first rule of the Code of Conduct. The solicitors may also breach the second rule of the Code of Conduct when they fail to declare the amount over the cost of the fee as profit. Dishonesty in handling telegraphic transfer fees is punishable by law. The seller can report such misconduct to the Solicitor Disciplinary Tribunal.