The Help to Buy scheme, designed to assist first-time buyers and those moving home, has significantly impacted the property market in England. As a law firm, Blackstone Solicitors, serving clients across England and Wales, we understand the intricacies of conveyancing, particularly when dealing with properties purchased through this government initiative. This article aims to explore the specific ways in which the Help to Buy scheme affects the conveyancing process, highlighting the additional complexities and considerations involved.
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Understanding the Help to Buy Scheme
The Help to Buy scheme has operated in various forms, primarily involving equity loans and mortgage guarantees. The equity loan scheme, in particular, has been widely utilised. It allows buyers to borrow a percentage of the property purchase price from the government, reducing the deposit required and making homeownership more accessible. However, this government involvement adds layers of complexity to the standard conveyancing process.
Increased Scrutiny and Documentation
One of the most significant impacts of the Help to Buy scheme on conveyancing is the increased level of scrutiny and documentation required. Lenders and the government’s Help to Buy agents have specific requirements that must be met, which can lengthen the conveyancing process.
- Help to Buy Agent Involvement: The Help to Buy agent, responsible for administering the equity loan, plays a crucial role. They must approve the buyer’s application and provide the necessary documentation for the lender and solicitors. This adds an extra party to the transaction, potentially creating delays if communication is not efficient.
- Detailed Lender Requirements: Mortgage lenders providing Help to Buy mortgages often have stricter lending criteria and require more detailed documentation. This may include evidence of income, credit history, and proof of funds.
- Equity Loan Agreement: The equity loan agreement itself is a complex legal document that must be thoroughly reviewed by the buyer’s solicitor. It outlines the terms of the loan, including repayment obligations and the government’s share of any future increase in the property’s value.
Valuation and Redemption Processes
The Help to Buy scheme introduces unique valuation and redemption processes that significantly affect conveyancing.
- Valuation for Redemption: When a homeowner decides to repay the equity loan, they must obtain a Royal Institution of Chartered Surveyors (RICS) valuation of the property. This valuation determines the government’s share of the property’s current market value. The conveyancing solicitor needs to ensure that this valuation is carried out correctly and that the redemption process is completed smoothly.
- Staircasing: Some Help to Buy schemes allow homeowners to purchase additional equity in their property, a process known as staircasing. This involves further valuations and legal documentation, adding complexity to the conveyancing process.
- Sale of the Property: When selling a property with an outstanding Help to Buy equity loan, the seller must redeem the loan. This involves obtaining a redemption statement from the Help to Buy agent and ensuring that the loan is repaid from the sale proceeds. The buyer’s solicitor will need to confirm that the redemption has been completed before the sale can be finalised.
Additional Legal Considerations
The Help to Buy scheme introduces several additional legal considerations that conveyancing solicitors must address.
- Second Charge: The equity loan is secured by a second charge on the property, meaning it ranks behind the mortgage lender’s first charge. This second charge must be registered with the Land Registry, and the buyer’s solicitor must ensure that this is done correctly.
- Restrictions on Alterations: Some Help to Buy agreements may include restrictions on alterations to the property. The buyer’s solicitor must advise their client of any such restrictions and ensure that they comply with them.
- Repayment Obligations: The equity loan agreement outlines the repayment obligations, including when repayments are required and how they are calculated. The buyer’s solicitor must ensure that their client understands these obligations and the potential financial implications.
- Information to the new buyer: When selling a property with a help to buy loan, the sellers solicitor must ensure the new buyer is fully aware of the loan, and how it effects the property.
Impact on Timelines
The additional complexities and documentation involved in Help to Buy conveyancing can significantly impact timelines. Transactions may take longer to complete due to the need for approvals from the Help to Buy agent and the lender, as well as the additional legal checks required.
As a law firm, Blackstone Solicitors, we understand the importance of managing client expectations and ensuring that transactions are completed as efficiently as possible. We work closely with all parties involved to minimise delays and keep our clients informed throughout the process.
The Importance of Specialist Legal Advice
Given the complexities of Help to Buy conveyancing, it is crucial to seek specialist legal advice. Solicitors with experience in dealing with these transactions can ensure that all necessary checks are carried out and that the buyer’s interests are protected.
At Blackstone Solicitors, we have a team of experienced conveyancing solicitors who are well-versed in the intricacies of the Help to Buy scheme. We provide clear and practical advice to our clients, helping them navigate the complexities of the process and achieve their homeownership goals.
Conclusion
The Help to Buy scheme has undoubtedly helped many people achieve their dream of homeownership. However, it also introduces additional complexities into the conveyancing process. Increased scrutiny, detailed documentation, unique valuation and redemption processes, and additional legal considerations all contribute to a more intricate transaction. Seeking specialist legal advice is essential to ensure a smooth and successful conveyancing process when dealing with a Help to Buy property.
How we can help
We have a proven track-record of helping clients purchase a new home. We are a multidisciplinary firm and have all the expertise inhouse to satisfy the most exacting requirements of our clients. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact Our Residential Property Solicitors
It is important for you to be well informed about the issues and possible implications of buying a residential property. However, expert legal support is crucial in terms of ensuring a positive outcome to your purchase.
To speak to a member of our New Enquiries Team today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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