If it’s ever happened to you when trying to buy a house in England or Wales, you might be envious of the fact that gazumping is practically unheard of in Scotland. Once your offer on the purchase price of a home has been accepted, the property is typically taken off the market, explained the online estate agency Zoopla on the 5th of May.
Although it is not illegal, the extreme rarity of any buyer being gazumped is down to several differences between property transactions south and north of the border.
Which? magazine explains that the sale of properties in Scotland is usually made by solicitors rather than estate agents.
They advertise the property for sale at a fixed price – in which case the first buyer to offer that sum is accepted – or offers above a certain amount – when each hopeful buyer must submit a sealed bid by a specific date.
The offer and acceptance are accepted by the exchange of “missives” between seller and buyer – formal documents which commit each party to the transaction.
In England and Wales, of course, offers and their acceptance are made “subject to contract”, noted an article in Landlord Today on the 7th of November, with the effect that negotiations – and the risk of gazumping – may continue right up to the exchange of contracts.
In Scotland, it is the seller who needs to provide – and pays for – a lot of the information which, in England, needs to be commissioned by the purchaser.
North of the border, the seller is required to provide a “home report”. This includes:
- a basic survey and valuation of the property – describing the condition of the roof, the outside walls and the plumbing);
- an energy efficiency rating, including carbon dioxide emissions; and
- a home questionnaire – completed by the vendor and covering issues such as whether the property has ever been treated for wood rot, or has ever flooded, plus council tax bands and parking arrangements.
An English version of these appeared in 2007 – as Home Information Packs – but never met with any success, and they were abolished in 2010.
In Scotland, your solicitor plays a more important role than is often the case in England – where you might only need to use the services of a conveyancing agent, for example.
But in Scotland, it is the solicitor’s job to:
- explain the Home Report to you;
- confirm that any alterations to the building have been given planning permission and comply with building regulations;
- draft and submit your offer “missive” to the vendor’s solicitor; and
- if your offer is accepted, confirm your mortgage with your chosen lender and agree on the date on which you will be picking up the keys and moving in.
Property purchase tax
Since 2012, the English equivalent of Stamp Duty in Scotland has been replaced by Land and Buildings Transaction Tax (LBTT), which applies to transactions on properties valued at more than £145,000 (although first-time buyers do not have to pay LBTT on homes costing less than £175,000).
In England, Stamp Duty Land Tax currently applies only on residential property transactions above £125,000 – although first-time buyers may claim an exemption on the first £300,000 of all properties bought for less than £500,000.
In Wales, the residential property purchase tax is different yet again. It is called Land Transaction Tax (LTT) and is levied on residential property transactions of more than £180,000. Different rules apply if you already own one or more residential properties.
Please note that the data is correct at the time of writing, but some aspects of taxation may change following the Election later this month.