THINKING OF A NEW HOME
Since the onset of coronavirus and the subsequent changes in how we live, travel, and socialize, the desire to return to some level of ‘normality’ has prompted an increasing number of people to start re-evaluating the suitability of their current ‘home-space’.
Those fortunate to retain their employment since the onset of Covid-19 will probably have had to continue working remotely from their ‘home-space’, which had not previously needed to accommodate your working environment and set-up on a 24/7 basis.
We imagine that in the ‘home-spaces’ of those fortunate to retain their employment and have a family, including school-aged children, those ‘home-spaces’ will have not only been challenged to accommodate more than 1 adult home-worker, but also more than 1 school-age child requiring a combination of home-schooling and entertainment on a 24/7 basis – and we can’t imagine the challenges with those ‘home-spaces’ with all of the above and pets!!
One thing is clear to the Attias Blue Properties Team, as our ‘home-spaces’ have become more and more challenged, we have become more conscious and aware of how vitally the right ‘home-space’ is for you and your family and we’re now in a much better position, after living through lockdowns and ongoing restrictions, to now know exactly what your current ‘home-space’ doesn’t have enough or for it be the ‘perfect home-space’ for your and your family now.
Buying a new home can be as daunting as it is exciting and thrilling, and you can never have too much information to help you prepare before taking your first big step.
We would like you to take full advantage of Attias Blue Properties’ services from taking a careful look at your budget, clarifying the buying process, identifying additional costs, through to exchanging contracts and arranging the move into your new home – we will make every effort to ensure you enjoy an enhanced and positive home buying or renting experience with Attias Blue Properties.
To Buy or Rent
The decision between buying a home and renting one is a major decision that not only affects your lifestyle but can affect your financial wealth.
After reviewing your finances with an independent adviser, you will be able to weigh up the pros and cons of buying vs renting, taking some of the following into consideration: –
Benefits of buying: –
- Depending on the average rent prices in your location, it might be cheaper to buy.
- Once your mortgage is paid off, the property is yours – providing long-term security.
- If your home increases in value during your ownership, you could use any equity, (i.e. its market value less your outstanding mortgage debt, to improve your property adding further value, or buy a bigger home for you and your family.
Disadvantages of Buying: –
- It’s a huge long-term financial commitment – affordability is key!
- Changes in interest rates can affect your repayments, are you prepared for an increase?
- Being prepared for the unexpected can be difficult, e.g. burst pipes, leaking rook.
- Buying your home may take all of your disposable income, leaving no spare cash for entertainment, holidays, new car, etc.
- If the property market dips, the value of your home may fall too making it difficult to sell should you need to.
- As a property owner, there may be additional ongoing costs you wouldn’t face if you were renting, i.e. community service charges.
Tax Benefits for Homeowners
All available tax benefits are dependent on your personal tax situation. As Always, Attias Blue Properties recommend you seek independent tax and financial advice prior to purchasing your new property.
Available Tax Relief Schemes For Property Owners:-
- Tax relief on mortgage interest
- Tax relief on qualifying life assurance premiums
- Tax relief for First-time Buyers
Note: There are no Capital Gains Taxes (CGT) to be paid in Gibraltar, and profits gained from the sale of a local property are free from all taxation on the proviso that the sale was not a ‘business transaction’.
The first step would be to review your financial situation to work out what you can afford and, if buying is still your preference, you will also need to consider accommodating the following costs:
- A deposit (usually 10% of the property value)
- Mortgage arrangement fee
- Survey fees
- Stamp Duty
- Legal Fees
- Removal Costs
- Other general running costs to expect in Gibraltar, i.e. Community Service Charge, Ground Rent, General Purpose Rates
- Your new property monthly utility bills, i.e. electricity, phone and internet charges, etc.
Whatever your decision – Rent or Buy – Attias Blue Properties will assist you in either securing your new home as a property owner, or finding your perfect place to rent, be it a new residential home or a commercial unit to launch your new business – Attias Blue is here for you!
Now Let Us Take You Through The ‘Buying Process’
Step 1 – Buying A Property You Can Afford
As we have previously mentioned, your home is probably the most expensive purchase you will ever make, so understanding your current financial position and, should you need it, getting the right finance for you and your circumstances is vital.
A lender, or mortgage provider cannot tell you how much you can afford to borrow, they can only tell you the maximum amount you are eligible to borrow – try this simple ‘affordability calculation’ to determine what your affordability figure is before you start your property search.
Household monthly take-home pay x 25% = Your monthly affordable mortgage
Household monthly take-home pay x 25% = Your monthly affordable mortgage
Joint husband and wife
Monthly take-home pay of (£2,400+£1,700) £4,100 x 25%
= £1,025 (monthly affordability figure)
When choosing a mortgage, find one that fits your needs, with a rate that is within your affordable budget, we advise you to seek independent financial advice to explore your finances, determine your budget and review the products available on the market prior to approaching a lender.
Unexpected closing costs can catch you off-guard, ensure you are informed about all of the costs you need to pay at ‘completion’, including property taxes, mortgage fees, insurance premiums, legal fees and moving expenses, which we will cover later in the process.
Extra expenses needed to secure and maintain your new property may take time to get used to, so you may need to initially keep an eye on your spending whilst you adapt.
Once you have a clearer idea of your current financial position and available funds, you will then have a budget in mind to begin your property search.
Step 2 – Affordable Property Search
Now that you know your budget, and you have decided you are now ready to change your current ‘home-space’, whether that is to buy a new property for the first time, to sell your property to up-size, down-size, or to rent, the Attias Blue Properties Team will start the search for your perfect ‘home-space’ that meets all of your needs within your affordable price range.
To assist in choosing your new home, here are some factors for consideration: –
Step 3 – Make an Offer
Once you have decided on the property you want to buy, and the price you are willing to pay, Attias Blue will present an offer to the property vendor on your behalf, keeping you constantly updated throughout.
Remember – you only pay estate agent fees when you sell a property.
Step 4 – Arrange a Solicitor
It is necessary to appoint a solicitor competent in property conveyancing, who will handle the legal process of carrying out the necessary property searches to confirm there are no planning or local issues that may affect the property value.
‘Conveyancing’, the transfer of property ownership from one person to another, usually involves: –
- Acting as the middleman between the buyer, the mortgage lender, and the vendor
- Checking any contracts
- Dealing with the Land Registry
- Checking property for structural risks/issues
- Sorting out Stamp Duty
- Transferring the funds during the sale
Essentially your chosen Solicitor will be fully competent in the entire property buying process, and acknowledges the need for, and provides, a swift, efficient service to ensure no delays occur throughout thisimportant stage of the buying process.
Legal fees can range from a minimum of £900.00 to 0.5% of the full asking/purchase price.
Registration & Disbursements
An approximate figure of £300 should be allowed, however this figure may vary.
Stamp Duty Taxes & Land Registry Fee
Stamp Duty is a one-off government property transfer-tax. You typically need to pay this within 30 days of completion.
Please see our section on Stamp Duty here.
Please Note: The registration procedure referred to in our Stamp Duty section should not be confused with the Land Registration procedure in the United Kingdom. In Gibraltar there is only a requirement, under the Land Titles Act 2011, to register the deed in order to keep a public record of property transactions. As a result, the protection afforded by the priority of periods granted under the Land Registry rules in the UK is not available in Gibraltar.
Attias Blue Properties guarantee that whichever legal professional or surveyor you choose, we will ensure a constant dialogue is maintained throughout the process to ensure you are always up to date on the status of your property purchase.
Step 5 – Arrange A Survey
Buying your new property will possibly represent one of the biggest investments you will make in your lifetime and therefore requires an adequate level of risk assessment on your potential new valuable asset.
We would always recommend commissioning a RICS qualified surveyor to carry out a property survey to identify any potential structural problems or defects that will be expensive to rectify once you have bought the property. Attias Blue Properties will gladly arrange for you to speak with a professional surveyor.
There are several types of survey available, here is a summary: –
- Valuation Survey
This type of survey is usually carried out by the lender to ensure the correct property value has been applied prior to approving the mortgage.
Be aware some lenders may charge for this service.
- RICS Home Survey Level 1 (survey only) – the most basic and cheapest survey includes: –
- RICS Home Survey Level 2 (survey and valuation) – as per Level 1, but offers more extensive information and includes: –
- RICS Home Survey Level 3 – a more expensive survey that gives detailed information about the structure and fabric of the property. This service includes: –
It is important to ask your chosen Surveyor for a detailed description of the full range of RICS Home Surveys they can provide. Check out the following link:- https://www.ricsfirms.com/
Step 6 – Finalise the Offer and Mortgage
The surveyors report may give you a reason to go back and renegotiate the price of your desired property for two reasons: –
- the survey may uncover problems with the property that will be expensive to fix, requiring a reduction in price to accommodate the repair costs;
- the lender may value the property less than the selling price, possibly leaving you with a shortfall of funds, requiring a conversation with the vendor to renegotiate the asking price.
This is a very delicate stage in the buying process as the survey report may result in:-
- Your mortgage application being rejected or mortgage offer declined;
- The property is withdrawn from the market by the vendor;
- The vendor accepts a higher offer from another buyer.
There are two types of ‘offer’ you can make: –
- Unconditional – a binding contract to buy outright – applicable if you have confirmed finance and are sure about the property.
- Conditional – becomes a binding contract providing certain conditions are met, i.e., valuation, inspections, mortgage approval.
Once you are certain about the property you want to buy, tell your lender you have made your decision to go ahead with your property purchase and apply to finalise your mortgage.
Home and contents insurance to protect your home and contents against loss or damage may be a condition of your mortgage, if not, we would gladly arrange for you the discuss your requirements with a local insurance provider.
Now is the time to confirm your decision to buy your property before the exchange of contracts and consider – once your offer is accepted by the vendor, to demonstrate intent to the vendor, it is customary to pay the agent a 2% reservation deposit to secure the property.
Upon receipt of the 2% reservation fee by the agent, the vendor will be expected to remove the property from the market as a ‘gesture of goodwill, there is no legal obligation for the vendor to do this.
As part of our legal requirement under Section 66 (2) of the Fair-Trading Act 2015, all deposits received by Attias Blue Properties are held in a separate designated ‘client’ bank account, which is segregated from the company’s funds.
Subject to any such express agreement between the parties, if for any reason the parties do not proceed to exchange contracts in relation to a sale, purchase, lease or other, or enter into a rental or tenancy agreement (as the case may be), the deposit will be returned forthwith to the payee in full without deduction or set-off.
Step 7 – Exchange contracts
If there are no problems or delays, you will now be ready to receive your contract for signature. Before signing we will encourage you to read through your contract with a solicitor to conform all of the details are correct and that you are happy with what the vendor has agreed to leave in the property and all queries have been answered.
Once contracts have been signed by both parties, both buyer and vendor are committed to the sale.
Step 8 – Completion and final steps – ‘Arrange Moving Day’
You, the buyer, have already paid your deposit so the remaining money due to buy the property will now be transferred from your solicitors’ account to the vendors’ solicitors account. Some of the money can come via a telegraphic transfer from the mortgage provider.
You, the buyer, now need to pay your legal fees to your solicitor.
The solicitor will register the property with the Land Registry.
The ‘settlement’ date is when the property title is transferred into your name and your mortgage begins. The ‘contract of sale’ sets out the settlement period when you must pay the full purchase price. Your solicitor will finalise the settlement with the lender and vendor – once complete, you will receive the keys to your new home.
Vendors need to pay their estate agent fees on completion.
You, the buyer, will need to pay any Stamp Duty and Land Registry fees, see our ‘Stamp Duty’ section here.
It’s time to organise your removal company.
It is also time to make arrangements for the utilities and facilities to be connected in your new home, i.e., electricity, phone, and internet, etc.
How Long Does The Buying Process Take
The process can move straight to completion within two to three weeks if:-
- the property title deeds are readily available,
- the vendor does not have a mortgage, and;
- the purchaser does not need a mortgage.
The process will usually take around four weeks from offer acceptance to completion if:-
- the purchaser has a mortgage in place.
Should either party have a sound reason to delay proceedings, it would be normal to exchange contracts and schedule a future completion date agreed by both parties.
We hope our overview has helped you understand the ins-and-outs of the homebuying process and, if you have decided to buy, sell or rent property in Gibraltar, Attias Blue Properties will help create a seamless and effortless buying experience by taking the time to discuss your particular requirements with you and then you letting us do what we do best – bringing your property dreams to life!
©Attias Blue Properties