Buying or selling property in Scotland and England
Sellers and Buyers face a problem if they have a house to sell in England or Wales and are relying on that sale to fund a purchase in Scotland (or vice versa) due to different legal systems applying north and south of the border.
Commentators have suggested that Chancellor George Osborne's recent changes to English Stamp Duty Land tax (SDLT) rates introduced in December 2014 are remarkably similar to reforms due to come into effect in Scotland in April 2015 to replace Stamp Duty with a new Land and Building Transaction Tax (LBTT).
That, however, is the closest both systems get to harmonisation and anyone involved in buying or selling property in Scotland and England has to be aware that there are fundamental differences between the Scottish system and that operating South of the Border when it comes to buying and selling a house.
The first significant difference, certainly for solicitors in the city of Edinburgh and other eastern areas, is that they also dominate the estate agency market through their membership of the Edinburgh Solicitor's Property Centre, through which some 85% of all properties marketed for sale in Edinburgh and the Lothians are advertised.
Local solicitor-operated property centres are found throughout Scotland - from Inverness to Dumfries, and though their market share varies from area to area, they enjoy a degree of market dominance any English estate agent could only dream of. Most solicitor firms employ an estate agent to deal with the marketing of their clients' properties with 'Schedules' prepared for Scottish properties, similar to English & Welsh 'Particulars of Sale'. At this point, the methods adopted in marketing property are not too dissimilar to those operating in England.
Conveyancing north of the border
The basics are the same as in the English system, but the timing of when the contract becomes legally binding is different. In Scotland, the contract usually becomes legally binding at an early stage at the start of the process, unlike in England where contracts are exchanged towards the end.
In Scotland when a seller puts the property on the market, a decision is made as to whether the property is offered at a 'Fixed Price', 'Offers Around' or on the basis of 'Offers Over'. Fixed Price has increasingly become the most common practice in a more challenging market.
'Offers Over' is the method typically used where the selling agent considers that there is likely to be keen interest for a particular property. Prospective bidders offer, in some cases, well in excess of the minimum offer amount expected to secure the property, in a manner similar to sealed bids for properties in demand more commonly seen with higher value and London properties in England. The seller is not bound to accept the highest offer.
Prospective Purchasers (which is the term commonly used rather than 'buyer') who are interested in pursuing a property are required to 'note their Interest' with the selling agent. This does not commit them to make any offer, but ensures that any interested buyer will be notified of any closing date set by the seller, by which time confirmed offers are to be received. Some sellers do not propose a closing date and may be happy to negotiate and accept a quick offer if demand for the property is unlikely to be high.
Home report and surveys
In Scotland the seller provides a Home Report which includes a 'single survey' (typically provided by a Chartered Surveyor), a pre-sale questionnaire personally completed by the seller and an Environmental Performance certificate (EPC). This is often all a purchaser requires and these surveys and reports will also be acceptable to lenders if the surveyor who conducted the Home Report is on their panel. If that's not the case, things have to wait until the lender instructs their own surveyor. In reality solicitors in Scotland usually offer subject to survey at the outset to ensure that the lender of choice does not require instructing their own survey.
Contract to purchase - conclusion of missives
The contract to purchase a property in Scotland itself takes the form of a series of letters known as 'Missives' generally signed by the parties' solicitors. Once an offer has been accepted and the seller's and purchaser's solicitors have agreed the terms they conclude a contract for the purchase known as the 'Conclusion of Missives'.
Historically, to increase certainty, and more recently to comply with legislative changes concerning mortgages, any conveyancer in Scotland tends to hold off from concluding Missives until the written loan offer is received by the purchasing Solicitor. This is so they can guarantee that the purchaser can fund the deal, which is unlike the English system where an offer can be made and accepted only for the deal to fall through because the purchaser cannot obtain sufficient mortgage funding.
When the Missives are concluded, a legally binding arrangement exists and neither party can withdraw without potentially being held liable for the consequent losses of the other party.
'Missives' used to be agreed and exchanged much more quickly than English contracts, as much of the preparatory work had been done prior to the offer being made. That speed meant gazumping was virtually unknown under the Scots system, but a lot of expense and effort on the part of the purchaser has to be front-loaded.
Missives can be accompanied by a variety of conditions, sometimes as a result of the conclusions of the survey by the purchaser which has been done at the start of the process. In reality, there is probably an average of at least three to four weeks between an offer and the exchange of 'Missives' in Scotland, which is beginning to be on a par with the timescale of the English system. During this time, there is no legally binding agreement, so either side can still walk away from the deal.
Unique cross border capability
Ordinarily you require separate solicitors to handle the transaction in the different jurisdictions in Scotland and England. With that comes all the associated issues of communication and co-ordination, making sure the correct documents are prepared and submitted at the correct time together with the sheer stress of dealing with two different teams, often with different ways of working, different opening hours and different means of keeping you informed of progress.
Access Legal, the private client arm of Shoosmiths LLP, is understood to be the largest conveyancing solicitors' business to be accredited under the Law Society's Conveyancing Quality Scheme in England and has most probably helped more people move home than any other law firm. We provide a friendly, personal and professional conveyancing service that will guide you through the legal process of buying or selling a property anywhere in the United Kingdom
How we can help
Our Edinburgh office enables us to offer a unique cross-border capability, meaning you do not have to use different solicitors for conveyancing if moving from England to Scotland (or vice versa) or purchasing/selling property in either jurisdiction. Expert teams with a shared ethos and focus on client satisfaction using the same IT systems and the same administrative approach already work closely, co-operatively and collectively as part of the same national law firm.
Shoosmiths provides a direct link to lawyers north and south of the border who strive to simplify the law for their clients presenting it in terms and language that people can comprehend. Simply call us on 0370 086 2200 for further no obligation information.