When Do I Pay Solicitor’s Fees When Buying a House?
When buying a house, solicitors fees should be paid on the exchange of contracts or on completion. Most solicitors will request a fee upfront to cover the costs of the disbursements. There are also solicitors who work on a no sale no fee guarantee, meaning that you only pay the legal fees when the sale goes through.
In this guide, we’ll be taking you through when you have to pay solicitor fees when buying a house.
Legal Fees
Legal fees cover the work that your solicitor does on your behalf. Solicitors usually request an initial deposit known as a payment on account. The remaining legal fees will be requested once the exchange of contracts has occurred. The legal fees cover the costs of your solicitor's time. Some offer a fixed fee pricing structure while others work on an hourly rate.
The average legal fees are £1,320 when buying a freehold property and £1,490 when buying a leasehold property. Some solicitors will provide quotes including VAT, while others may add VAT on top of the quoted fee. Therefore, make sure you check with your solicitor or conveyancer when receiving the quote.
Read more about Conveyancing Fees
Disbursements
Conveyancing disbursements are costs that your solicitor will pay to third parties on your behalf. This means that your solicitor will require the payments beforehand at the start of the conveyancing process.
A large portion of the disbursements is the conveyancing searches. The average cost for conveyancing searches is between £250 and £450. These include the following:
- Local Authority Search
- Environmental Search
- Water and Drainage Search
Other disbursements that you will have to account for include the Land Registry fee, Bank Transfer fee, and a bankruptcy search. The costs will vary depending on various factors and are usually a fixed fee.
Read more on What are Conveyancing Disbursements?
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Deposit
The deposit is usually paid when you exchange contracts. This is because the transaction becomes legally binding at this stage. Once you have exchanged contracts and paid the deposit, you’ll be able to arrange a completion date.
The deposit is usually paid once all the conveyancing searches have been completed. This means that all parties are satisfied with the most recent agreement and the buyer is happy to pay the deposit.
Stamp Duty
Stamp Duty is a tax that is paid when buying a property. It is paid within 30 days of completion. If the Stamp Duty is not paid on time, you will face financial penalties. Stamp Duty Land Tax is often abbreviated to SDLT in England and Northern Ireland. It is known as Land Transaction Tax in Wales and the Land and Buildings Transaction Tax in Scotland.
The amount of Stamp Duty you owe depends on the value of the property. In England and Northern Ireland, Stamp Duty is not paid on properties worth up to £250,000. Buyers pay 0% for properties up to £225,000 in Wales and £175,000 in Scotland.
If you are a first-time buyer, you will pay 0% Stamp Duty on property purchases worth up to £425,000.
Find out how much Stamp Duty you owe using our Stamp Duty Calculator
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Additional Fees
Always ask your solicitor for a breakdown of your fees. This helps to avoid any surprise costs that may be added later on. Also, if your solicitor does not include VAT in their initial quote, make sure that you ask them for a full quote.
Some solicitors may try to charge you for any photocopies. However, this should be free of charge so make sure you challenge this.
What Will Affect My Solicitor Fees?
There are various factors that can affect how much you will pay in solicitor fees. Our Conveyancing Fees Calculator can give you an approximate idea.
The two major factors that you will have to consider are the house price and the complexity of the transaction.
House Price
The first factor that will affect your solicitor fees is the property price. This is because the solicitor fees increase as the property price increases. For example, a freehold property that is worth between £200,000 and £300,000 will cost around £1,320 in solicitor fees. On the other hand, a freehold property valued between £500,000 and £600,000 will cost around £1,750 in fees.
Complexity of Transaction
The other major factor that can impact your fees is the complexity of the transaction. The main example of this is leasehold vs freehold properties. Leasehold properties require more paperwork to be submitted by your solicitor. This means that solicitors charge more for leasehold properties compared to freehold properties.
Another example of a complicated transaction is those who are part of a property chain. This means someone who is buying and selling at the same time. However, if you are a first-time buyer or a cash buyer, you’ll find that there are fewer obstacles during the conveyancing process.
Read more about Leasehold Solicitors
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Do I Still Pay Solicitors Fees if Sale Falls Through?
This depends on your solicitor. As mentioned previously, some solicitors offer a no sale no fee guarantee. This means that you won’t be charged for any legal work until the contracts have been exchanged and the sale is legally binding.
If your solicitor does not have this guarantee in place, you will have to pay fees for the time that they have spent on the transaction up to that point.
The further along you are in the process, the higher the fees you will have to pay back.
Regardless of whether your solicitor has a no sale no fee guarantee, you’ll most likely lose the money spent on any disbursements. This is because they are carried out by third parties.
Read more on Solicitors Fees When a Buyer or Seller Pulls Out
Finding a Conveyancer
At Compare My Move, we can assist you in finding a conveyancer. Simply fill out our comparison form and we will connect you with up to 6 licensed conveyancers. You can compare quotes and save money on your conveyancing fees.
