'Searches' or 'Property Searches' are something you have to pay for early on in the process of buying a property and which are sometimes the reason for a property sale process slowing down or temporarily (and frustratingly!) stalling. But what are they, why do we need them, and why can they take so long?Read on to learn more from , one of our company Directors.
'Searches' or 'Property Searches' are something you have to pay for early on in the process of buying a property and which are sometimes the reason for a property sale process slowing down or temporarily (and frustratingly!) stalling. But what are they, why do we need them, and why can they take so long?
Read on to learn more from Clare Simmons, one of our company Directors.
So what are searches - the short version please
Searches are basically the detailed due diligence performed on the property you want to purchase, in an attempt to understand factors that could impact its value today or in the future, or the potential for resale, as well as things which could impact the way you are permitted to use or modify the property. Searches provide the data that informs the 'Buyer Beware' side of a property transaction.
Ok - they sound important and I'd like to know more - let's start with Local Authority searches
These enquiries will be with the district / town / borough council, or other overseeing local agencies, and specifically look for issues concerning planning, building control, highways or pollution. The first element of these searches is termed 'LLC1' and will highlight whether a building is listed, is located in a conservation area or is in an area with Tree Preservation Orders in effect.
The second element of local searches concerns future development plans that could affect the property and is termed 'CON29'. Things that could be uncovered here are proposals for new roads, railways etc., planning applications that have been submitted and might impact the property, any building regulations history for the property, and whether the property is located in an area of contaminated land or could be affected by radon.
Those all sound like good things to know - what about the water and drainage searches?
This search is made through the local water company and seeks to establish a number of things, including: Who owns and maintains sewers, whether the property is connected to public water and drainage and the location of any nearby public pipes or drains and whether this might impact any future extension plans you might have for the home.
What do environmental searches look at?
These searches highlight any elements of the natural environment which might impact the property, with the most well-known natural hazard being potential flooding issues. Other environmental concerns looked for are potential for landslides, subsidence or contaminated land.
And finally, what about the Land Registry search?
Although one of the cheapest and usually quickest searches, this is the most critical, as it seeks to prove that the person selling the home actually owns it and so is legally permitted to sell it.
When does the searches part of the sales process take place?
Solicitors / Conveyancers generally 'order' searches (that is, file the requests with the various local authorities / overseeing bodies) as soon as you have instructed them to act on your behalf (which happens after your offer is accepted), and have paid the appropriate fees. As searches can sometimes take a while to be returned by the body responsible, it is prudent to get this process going as soon as possible so as not to hold things up later.
How much do searches cost? And what happens if the deal falls through - can I get my searches money back?
The cost for searches varies by local authority, and also how complex the situation ends up being for the property in question. Typical costs can be in the region of £250-£500, or more if additional searches are needed.
Unfortunately there is no refund if the sale falls through - you have essentially paid for the data, and for someone's time looking for that data, so the money is spent. The only potential avenue to recoup some of your costs is to offer to sell the searches for the property to a future purchaser, as this will save them some time. They are unlikely to reimburse you for the full amount however.
Hold on - you mentioned 'additional searches' - what might they be, and how do I know if I need them?
More in-depth enquiries might be required for properties in certain geographical areas, for example those where coal or mineral mining has taken place in the past, as in our area in parts of eastern Cornwall for example. These would look in more depth at locations of mining shafts, tunnels, spoil heaps etc.
Another search needed might be a 'chancel repair' search if the property is close to a church - this determines whether owners of the property are responsible for a share in any church repair costs, and is ascribed to the land, rather than buildings, so can impact properties both old and modern.
How long do searches take?
This depends on a number of things, the main elements being the body providing the information and their capacity to work on your case as well as the location and complexity of the property you want to purchase. Some searches can be returned in days, others can take several weeks. Your estate agent or solicitor should have a good feel for how long searches have recently been taking to come back in your area.
I'm in a rush to complete the property purchase - can I skip searches?
As searches are looking at potential impacts to property value, if you are purchasing the home with a mortgage, the mortgage lender will require that searches are purchased, to give assurance that the asset they are loaning against will retain its value - so no skipping in this case, sorry.
If you are buying with cash, then you do have the option to skip searches, however your solicitor will likely advise strongly against it - you don't want to be in the position of having a property which is impossible to sell in the future due to an issue uncovered in searches that you did not perform yourself when you bought the property (buyer beware again).
There is a type of insurance policy called 'Indemnity Insurance' that can be taken out to allow a transaction to proceed without the usual searches in place, which will usually cover a loss sustained through an issue that would have come up in searches. In this case, coverage is only valid if the buyer had no previous knowledge of the potential issue that would have been uncovered. Your solicitor or conveyancer will be able to advise if purchasing this kind of insurance policy is prudent.
What are the kind of issues that can come up in searches?
Some examples of possible issues that searches can uncover are: The potential for severe subsidence; learning that the work you wish to do to a property isn't possible; finding out that there is a disputed right of way or boundary associated with the property; determining that a previous extension was illegal and so needs to be taken down; finding out that there is a debt on the property which could become your problem; learning that a large housing development is planned in what is currently the unobstructed beautiful rural view.
My searches have uncovered some pretty big potential issues with the property - is this a deal breaker?
Its another 'it depends' answer……if you're a cash buyer, it will all come down to your personal risk tolerance - many potential issues may never become actual problems - the job of searches is just to flag everything that *could* impact the property. If you are using a mortgage to purchase the property, then the lender will have the final say and could well deny financing if they deem the risk too high.
For cash buyers, there are particular issues that can be covered by a form of indemnity insurance - these cover legal defects with the property which either can't be resolved or would be very costly or time consuming to do so. These policies cost in the region of a few hundred pounds, and may be well worth buying in order to move ahead with purchase of your dream home - definitely one to discuss with your solicitor/conveyancer however.
Searches provide data essential to the informed purchase of a home and help make sure you end up with a property which you pay the right price for, you can insure, you can modify as you had planned, and you have the peace of mind that it will be saleable in the future, if you decide to sell.
Hopefully this was helpful in deciphering a piece of the jargon that estate agents throw around every day - look out for the next instalment of the Jargon Buster coming soon!