Reply to: How does the offer process work when buying a house in the UK?

[sartois]

Even on a directory's salary under £10k per year? Unless they look at all your finances and consider your business account too.

Yes I did check this... problem is that will put you below the minimum salary required (40k). So then you have to explain that you actually have a Ltd company and at that point you might as well be talking klingon as you don't fit nicely into their system. Anyway, unless your missus is a key worker then it's unlikely that you would get one as there is a scoring system on these, as well as the fact you need to be living or working in the borough too.

Not saying it's impossible, but unlikely

[Daventry]

You probably won't be eligible for Shared Ownership anyway as they have min/max earnings and if you are considered to be earning more than (I think) £66k then you will be over their limit.

Even on a directory's salary under £10k per year? Unless they look at all your finances and consider your business account too.

[sartois]

Whereabouts is it?

I'm starting to consider new homes, but so far only see Shared Ownerships. These are not ideal because if we have kids and need to move out, it's unlikely they'll let you sell or rent out.

Canning Town. They are still building more there for the next phase. It's also walking distance to one of the new Crossrail stations at Custom House so pretty much guaranteed to increase in value. The builder is Countryside Properties, but there are developments all over the place at the moment.

You probably won't be eligible for Shared Ownership anyway as they have min/max earnings and if you are considered to be earning more than (I think) £66k then you will be over their limit.

[Daventry]

The only way I could find a place to buy in London was by getting a new build flat. Not ideal but at least you're not competing with loads of other buyers and the price is well.... the price as there is no bidding wars on these places and its on a first come first served basis. Yes, you can't see it before you buy it as you reserve off plan, and no it's not going to be your dream home, but buying in a central London location with good transport links where property prices are going up 14% a year seems like a sound investment... and it's cheaper than renting (for me anyway).

Also they are not allowed (at least in the area that I bought) to sell them to overseas investors.

Whereabouts is it?

I'm starting to consider new homes, but so far only see Shared Ownerships. These are not ideal because if we have kids and need to move out, it's unlikely they'll let you sell or rent out.

[sartois]

The only way I could find a place to buy in London was by getting a new build flat. Not ideal but at least you're not competing with loads of other buyers and the price is well.... the price as there is no bidding wars on these places and its on a first come first served basis. Yes, you can't see it before you buy it as you reserve off plan, and no it's not going to be your dream home, but buying in a central London location with good transport links where property prices are going up 14% a year seems like a sound investment... and it's cheaper than renting (for me anyway).

Also they are not allowed (at least in the area that I bought) to sell them to overseas investors.

[Goatfell]

How about

Gazumping and how to avoid it

Lock in agreement
A lock in agreement (sometimes called a lock out, preliminary or exclusivity agreement) is a more formal way of getting some time to arrange your affairs without worrying about competing offers being made.

The way these normally work is that both buyer and seller agree to pay a deposit (eg 2% of the property price). If either side tries to back out of the sale or change the price without good reason, their payment is forfeit to the other party. The written agreement should list those things which would allow for an alteration, such as problems with the survey. The exclusivity granted in such an agreement is for a limited period, usually about 10 days from receipt of the contract.

Provision should be made for either side delaying sending paperwork. It stands to reason that such a document will cost some money in legal fees, but you may decide it is worth it for the peace of mind. Therefore it may be something you want to consider when selecting a solicitor.

Insurance
Lastly, it is possible to buy insurance which would pay you an agreed sum to cover losses in the event of being gazumped.

[Daventry]

It seems in some parts of the country the market is totally officially mad.

My Brother has just sold his house which went on the market on Tuesday. They haven't got anywhere to go to yet because until their house was sold their offers were just being ignored.

Indeed.

According to the link posted above, another 2-bed flat in a building next to the one I made an offer for - same development - was sold for 345k in January 2014.

I suspect the one I was looking at was sold by 350k or more even though the 345k one is better as in the kitchen and bathroom have better quality and you don't need to touch them at all.

That's the reason I didn't make my "best" offer yesterday. I thought that if those flats were sold around 345k and this one is not as good, it wouldn't be worth the same price.

Obviously I was wrong or maybe it's just the pace we have now - i.e. prices have gone up in this area 1.50% in just 2 months.

[eek]

It seems in some parts of the country the market is totally officially mad.

My Brother has just sold his house which went on the market on Tuesday. They haven't got anywhere to go to yet because until their house was sold their offers were just being ignored.

[SpontaneousOrder]

They don't necessarily want you to know much you won/missed out by, because price offered isn't always the reason a vendor will choose to sell to one party over another.

I've had 2 viewings of a house and the immediately offered 100% of the asking price straight up, and was informed when the agent called me back that they vendors didn't want to sell to me because they thought that I was more likely to pull out before completion (I think they were expecting issues with the survey, and knew I was on a 100% mortgage although in reality I had access to a lot more money and was on a decent wage - looking younger than my years probably didn't help).

It's easier to pick and choose who to sell to when you can just say "your offer was beaten".

[kevpuk]

Well yes but given that exchange is usually 1-4 weeks before completion

FTFY

[Smartie]

I guess these days there are a lot of parties interested in keeping this system. They'll think about it when the bubble bursts and it's the buyers who are in a position to pull out and reduce their offer upon exchange of contracts.

We've had falling prices before - they didn't think about it then and I very much doubt they will next time.

[Smartie]

Actually, from Exchange of Contract there is financial remedy potential......just saying

Well yes but given that completion is usually 1-4 weeks after exchange, but offer to exchange can take over a year that's of little concern. Post exchange is not where the major risk is for purchases in the current system.

[Daventry]

I had an offer accepted nine months ago and still have no completion date in sight. In that time the local property prices have increased by at least 10%. The vendor might well decide to up the asking price substantially and there would be nothing I could do about it except start the whole process again but with property a lot more expensive now.

I guess I'll just be a tenant forever...

In the Scottish system, once your offer is accepted it's a legal contract. God knows why we don't use a similar system.

I guess these days there are a lot of parties interested in keeping this system. They'll think about it when the bubble bursts and it's the buyers who are in a position to pull out and reduce their offer upon exchange of contracts.

[kevpuk]

Buying a property in the UK, and particularly in London at the moment can be a nightmare. You have no legal agreement until you have signed the final contract (completion). Up until then, the vendor can withdraw without any penalty or increase the asking price at will.

Actually, from Exchange of Contract there is financial remedy potential......just saying

[Smartie]

Buying a property in the UK, and particularly in London at the moment can be a nightmare. You have no legal agreement until you have signed the final contract (completion). Up until then, the vendor can withdraw without any penalty or increase the asking price at will.
Many people will be in a chain and if anyone in the chain does this it can break the whole thing and vastly increase the time it takes to successfully complete your purchase.

I had an offer accepted nine months ago and still have no completion date in sight. In that time the local property prices have increased by at least 10%. The vendor might well decide to up the asking price substantially and there would be nothing I could do about it except start the whole process again but with property a lot more expensive now.

In the Scottish system, once your offer is accepted it's a legal contract. God knows why we don't use a similar system.

In answer to your question, you lose any money you've spent so far but you still have your deposit and stamp duty because that's only payable on completion.