The conveyancing quote demystified – what are disbursements?
If you have started down the lengthy process of buying a property in England and Wales, at some point you will require the services of a good conveyancing solicitor. The usual process is to find a few companies that appeal to you and ask for quotes, usually three, and set about comparing them. And within all of them you will come across a set of additional extras, called disbursements.
Disbursements are the extras involved in conveyancing that are not part of the conveyancing solicitor’s fee. The basic costs are covered in the headline rate, and this is often very attractive. Where the costs start to mount up is in the disbursements. Unfortunately, most of these are simply an unavoidable expense of purchasing property. They cover the cost of reports and other expenses to outside parties that a solicitor accrues in the course of doing your business.
Local searches – These are searches made to the Local Authority in the area which the property you are buying is located. They cover many aspects of the property, including access rights, adopted road agreements and other factors that may make a difference to your desire to continue with the purchase. These searches are either done by the Local Authority or by a third party. Costs vary by how the search is done (a premium is charged if the Local Authority carry out an official search), and also by location, with some local Authorities charging half as much as others. There may also be extra charges involved, for example, for additional enquiries related to your purchase, or copies of official documents.
Drainage, water, environmental and coal – You may need all or just some of these searches, depending upon which area you are purchasing in and the requirements of your mortgage lender. Those purchasing properties in the North East of England usually need a Coal Authority search, whereas if you are buying in Central London, you won’t need one. All of these searches are chargeable individually as they come from separate organisations.
Bankruptcy search – Most mortgage lenders require this as part of your purchase. The search usually happens just prior to completion in order to check that you haven’t gone bankrupt at the last minute.
Stamp Duty Land Tax (SDLT) – This is the tax you pay to HMRC on completion of your house purchase and is based on the purchase price. Your conveyancing solicitor deals with the organisation and transfer of funds, and takes on the responsibility for doing so accurately.
Land Registry search fees – Your conveyancing solicitor searches the Land Registry records to check that the vendor of the property you are buying has good title. In other words, this is the legal right to market it and sell it to you.
Money transfer fees – There will be money flowing in all directions during the course of a house purchase and sale. Your conveyancer is responsible for organising some of these. Telegraphic transfer fees usually cover the cost of wiring your deposit mortgage funds to your vendor and CHAPS fees are charged by the bank you have your mortgage with on release of your funds.
Land Registry registration fees – Once your new home is purchased, your conveyancing solicitor will register your ownership of the property with the Land Registry and this also accrues a fee. Some properties can be registered using a new electronic system, but unregistered land must be registered using the old, snail mail based system and this cost is double the electronic method.
There may be other disbursements that are particular to your purchase and not part of a standard transaction. Leasehold purchases and sales usually cost significantly more than freehold, with piles of extra paperwork and third party charges to account for. Good conveyancing solicitors will be upfront about all charges and disbursement and will promise no hidden fees so you know roughly what you will be paying at the end. Conveyancing itself is great value compared to say, Estate Agents fees, but those disbursements can really mount up and make it difficult to compare like with like.