Conveyancing Disbursements Explained
Disbursements are the fees and taxes that your conveyancing solicitor must pay to other organisations or third parties as part of the house-buying process. At In-Deed, we pride ourselves on being as transparent as possible about the costs of conveyancing. In this comprehensive guide, we detail the standard conveyancing disbursements along with an explanation of what the payment is for.
These payments are not part of the solicitor’s fee for carrying out your conveyancing. Instead these are separate fees, taxes and charges that are often paid up front when you are buying a property. When you instruct a solicitor through In-Deed, he or she will explain clearly from the start what additional costs are involved in your particular transaction.
Fees for essential property searches, such as those carried out through a local authority or water authorities, are fixed by the provider and your solicitor will not add on anything to that fee. Others, such as Stamp Duty Land Tax and HM Land Registry fees, are calculated according to the value of the property. Your solicitor will be able to give you an estimate of the overall costs involved once the price of the property has been calculated.
Among the most common disbursements you can expect to pay when purchasing a property are:
- HM Land Registry fees
Every land and property transaction in England must be registered at HM Land Registry. This government department charges a compulsory fee for registering the change in ownership, with the fee applied on a sliding scale depending on the price of the property or the mortgage on it. Current fees range from £20 to £910. Check the Land Registry site for more information on fees.
- Official copy entries and filed plan
Your solicitor must apply to the Land Registry for an official copy of the deeds and an official copy of the filed plan when you are selling your property. Where a document referred to in the official copy is not set out in the official copy, your solicitor will have to obtain an official copy of the document. When you are buying a property, your solicitor will obtain an official copy of the filed plan to use for search purposes, sometimes referred to as the Search Plan.
When you buy a property or remortgage your existing home, your solicitor must undertake certain legal searches on the property that reveal more information about the land on which it stands, the surrounding area, environment, water and drainage, and details of any planning applications. Other common searches in England and Wales are chancel repairs and mining and brine mining. Read more about the most common searches and why they are required here.
When you are buying a property, your solicitor must carry out a search against the names of all buyers and/or borrowers in the Land Charges register. This search will reveal if anyone involved in the purchase is currently bankrupt, is an undischarged bankrupt or is about to be made bankrupt in a pending court action.
- Local search indemnity insurance
A full local search on a property may not be required when you are buying without a mortgage or where your lender agrees. In this instance, your solicitor may recommend that you purchase local search indemnity insurance to protect you against any problems that arise that might otherwise have been revealed in a local search.
- Other indemnity insurance
Solicitors use indemnity insurance to protect you from any number of issues that could arise and affect your sale or purchase. Common issues are around title deeds, leases, insolvency, restrictive covenants and missing landlords. The solicitor will arrange the insurance and you will pay the premium.
Where the property you are buying is leasehold, you must pay a fee to the freeholder (landlord) or their agent to register you as the new owner and your lender as an interested party. Where a separate management company is involved in managing the lease, you may have to pay a fee to the management company.
When you sell a leasehold property that is subject to management company rules, ground rent payment and service charges, your solicitor will require the specific details of these from the freeholder or management company. The management company will charge a fee for providing this information and the fees varies from company to company.
When you are buying a leasehold property where the seller has paid the ground rent and/or service charges for the year in advance, the proportion of that cost that has to be met by you will be agreed by your solicitor and the seller’s.