Buying in Scotland – What you should know
Are you buying a home in Scotland? Buying in Scotland is slightly different to buying in other parts of the UK. We will explore some of the main aspects of house buying that are unique to Scotland in this blog.
Old homes vs new build homes
In Scotland, as in much of the rest of the UK, there are also differences between buying an old home and buying a new build home – where there are differences, we have noted them for you in each section.
The pricing system of older homes in Scotland can be quite complex. You may see labels such as ‘offers over’, ‘offers in the region of’ or ‘fixed price’ next to the advertised price of the home listing.
Most old homes being sold in Scotland use the ‘offers over’ system. This means that the price advertised is the lowest price the seller would be willing to accept for the home.
Note of interest
If they would like to make an offer on the home, prospective buyers need to provide the seller with a ‘note of interest’ through a solicitor, so that they can be advised when a closing date has been set. A closing date is the final date that interested buyers can make an offer on the home.
Once a closing date has been set an offer is usually made through a closed bidding system. This means that as a buyer, you have no idea how much other prospective buyers have bid on the home, or even if there are any other bidders to compete against.
This can make it hard to gauge how much to bid on a home to be successful and can also encourage people to offer more than the house valuation. In Scotland, any difference in price between the house value and the agreed purchase price must be paid for by the buyer upfront, as a lender will not cover this difference.
New build homes
Buying a new build home in Scotland is a lot less complicated.
All new build homes in Scotland are offered at a fixed price, meaning that the properties are available on a first come, first serve basis.
Reserving your home
There is no bidding system – rather, buyers are required to pay an initial reservation fee, a further deposit on concluded missives and won’t need to pay for the balance until the date of entry.
Reservation fees differ according to each developer. At Campion Homes, our reservation fee is usually £500.
All old homes in Scotland must have a home report available before they are put on the market.
Home reports contain information about the home’s energy efficiency, general condition and a detailed questionnaire.
Just one report
In Scotland, the home report is at the cost of the seller, which avoids individual prospective buyers having to commission their own separate initial surveys.
The home report is only preliminary and won’t go into detail – if there is any doubt about the quality of certain aspects of an old home, such as dampness or roof condition, then buyers will need to commission a more thorough survey at their own cost.
New build homes
As new homes are in brand new condition there is no need for a home report, or to have a survey commissioned. You can be assured that all aspects of the home are in excellent condition.
If you are buying in Scotland, many new build homes are covered by the NHBC 10 year scheme for structural integrity.
In addition to this, Campion Homes provide a 2 year warranty from date of move in.
Many of your appliances will comes with standard manufacturer’s guarantees and warranties. Ask your developer if you need guidance on what guarantees they offer.
Land and Buildings Transaction Tax (LBTT)
Stamp duty was replaced in Scotland by the Land and Buildings Transaction Tax (LBTT). This applies to both old and new homes in Scotland.
LBTT is applied on a band basis, with the percentage of tax required to pay increasing with the purchase price of the home. At present, the LBTT rates are as follows:
Property purchase price
Up to £145,000*
Above £145,000 to £250,000
Above £250,000 to £325,000
Above £325,000 to £750,000
*For first time buyers, no LBTT is applied for properties with a purchase price up to £175,000.
To calculate how much LBTT you would be required to pay, use this helpful LBTT calculator.
In England and Wales, no legally binding agreement to buy or sell a property exists until both parties sign and exchange contracts, which often happens on or just before move in day. This means that sales can fall through more easily, and with little notice, which could negatively impact either the buyer or the seller.
In Scotland, the system is slightly different. A sale is legally binding once a series of formal letters called ‘missives’ are exchanged between the buyer and seller’s solicitors. It is not possible for either party to back out of the sale at this point, unless for exceptional circumstances. This applies to both old and new homes in Scotland.
After the missives are concluded, title deeds will be examined, a document called a property ownership transfer document or ‘disposition’ will be drawn up, legal arrangements between you and your mortgage provider will be agreed, and, if applicable, you will arrange your LBTT payment.
After money is exchanged, you will receive your keys and disposition – the property is now yours!
Hopefully this blog has helped you to identify some of the key differences between buying in Scotland and buying in other parts of the UK.
If you would like to live in a brand new home in Scotland, learn more about our beautiful developments in excellent locations.
If you have a question about buying a new build home in Scotland, get in touch with our helpful team.