The Definitive Conveyancing Quotation

In this article I will try to give you an idea of what you should be looking for in a quote for a residential sale and/or purchase.

Fees
Also called ‘costs’, this is what the conveyancer is going to make out of the transaction. Fees vary throughout the country and in general a higher fee means a better service. The majority of firms operate on a fixed fee basis but some do charge on a time basis. Fees are very, very low these days. If you take the fee and divide it by 10 that’s roughly what you’re being charged per hour. Check this against the fee-earner’s notional hourly charge-out rate and it will invariably be lower. No value element is included so you’re getting really cheap legal time. One reason for this is that conveyancing is a loss-leader for many firms and for estate agency groups in particular. One national group’s annual accounts show that their conveyancing business loses them over £1 million a year but they make 60 times that in related estate agency, surveying and financial services. Very few lawyers make any serious money out of conveyancing.

Because fees are so low many firms are tempted to hide their costs and I will talk more about these (and how to recognise them) below.

The best advice I can give you is to ignore whatever figure is quoted for fees. Anything you will be quoted is very reasonable and you are getting a great deal. In my opinion conveyancers should charge percentages like estate agents. If anything, go for the higher quote if you have to choose between two lawyers you think are equally good: chances are you would prefer the one with the higher price if their prices were equal. Select on quality!

Oh, and the second best advice I can give you is: If you are moving on a tight budget, don’t. You’re only feeding house price inflation by stretching yourself to the limit. Especially with leasehold property (and especially especially with shared-ownership) there is a big risk you will get into trouble with paying service charge (which fluctuates year to year).

Expenses
Also called ‘disbursements’, these are things the conveyancer has to pay out to other people on your behalf. As these should remain fairly constant it is possible to go into detail about what they should be. Let’s break it down. I’ll use these codes in combination: sale (S), purchase (P), leasehold (L) and unknown (U) to show what type of matter each disbursement applies to. Figures are approximate.

Official Copy Entries (S) – £4 to £8
Paid to the Land Registry for an up to date copy of the register of title.

Other copy documents (S U) -£2 to £70
Sometimes it may be necessary to spend extra money on other copy documents. Examples might be deeds or leases from the Land Registry, copies of planning or building regulations from the council, copy NHBC documentation if it has been lost, etc. If the cost is significant you should be consulted first.

Telegraphic Transfer Fee (S P U) – £20 to £30
Not really a disbursement but often listed as one. Needed when paying off the mortgage on a sale, sending completion money on a purchase and/or sending money to your bank account.

Local Search (P) – £150 to £250
Cost varies from borough to borough. This is the basic conveyancing search carried out with the council. It answers a number of important questions (e.g. road adoption, compulsory purchase orders, road schemes, planning history, listed buildings, conservation areas etc.). A ‘personal’ local search can be carried out by a private search agency but this should only be done where the council has a long delay and time is of the essence. Some cut-price conveyancing services use personal searches by default as they are cheaper.

Drainage Search (P) – £40 to £50
Should be done on any freehold purchase but often not necessary on blocks of flats. Checks connection to mains drainage and water and provides a map of the public sewers and water pipes around the property (there are serious implications if a public sewer runs under the property). Some firms use the water bill to check connection to the drains, but this doesn’t check the route of the sewers.

Environmental Search (P) – £30
Searches the land near the property for records of potentially contaminative uses. Features an opinion from an environmental consultant as to whether the land is likely to meet the legal definition of contaminated (with associated cleanup costs).

Planning Search (P) – £24
The local search only shows planning applications on the property itself. This search shows planning applications on nearby properties, of great interest to buyers.

Other Searches (P U)
Other searches may be necessary, such as coal or tin mining searches or a commons registration search, depending on the location of the property. Costs vary.

Stamp Duty Land Tax (P) – 0/1/3/4% of purchase price
Government tax on property purchases. If the price is below £125K you pay nothing. Up to £250K you pay 1%, up to £500K you pay 3% and over £500K you pay 4%. In some disadvantaged areas the lower limit is raised to £150K.

Land Registration fee (P) – £40 to £700 depending on purchase price
Fee paid to the Land Registry to register the purchase (and mortgage if applicable). Their fees vary (link to .pdf).

Land Registry Search (P) – £2
A search is made at the Land Registry after exchange to see if anything on the register of title has changed and to grant you a period of priority over any other applications for registration.

Bankruptcy Search (P) – £2 per name
If you are buying with a mortgage then this search will be done.

Landlord’s fees (P L U) – £5 to £200
With leasehold property there can be a number of obligations under the lease, like serving notice on the landlord with details of the new owner and mortgage, obtaining landlord’s consent to sell or entering into a deed of covenant. If there is a management company you may have to pay for a new share certificate to be issued. The costs can soon rack up but you won’t know what they are until your lawyer gets the draft contract.

Enquiries of Landlord or Managing Agent (S L) – £0 to £250
When selling a leasehold property it will be necessary to raise standard enquiries with the landlord or managing agent. They often charge a hefty fee for this.

Note: This list will be completed soon

Hidden Costs
I will talk for a little while about hidden costs. For the reasons outlined above, everyone is trying desperately to make some money out of conveyancing. Recognising that many people choose a firm based on price alone, it can be tempting to quote low and then bump up the price later. There are a few ways this can be done.

One way is to include ‘disbursements’ that really go into your own pocket. A good example of this is ‘postage and telephones’, which should be included in the fees as they are overheads of the business (although if they have to send a 5kg package to Australia then of course it is perfectly acceptable to bill that separately, we’re talking about normal correspondence costs here). Another example of this is a so-called ‘indemnity contribution’ (not to be confused with an indemnity policy) of £40 or so on a sale. The idea is that this is a ‘contribution’ towards the lawyer’s professional indemnity insurance policy. This is an overhead; you contribute to it already by paying fees. It is not a legitimate disbursement. A pretty good test of a legitimate disbursement is whether you can see a receipt for it from the person the lawyer paid it to.

Another way is to charge separately for certain elements of the work being done. This is a tricky one, as it is perfectly reasonable to charge £50 + VAT to fill out the 20 page stamp duty tax return, £25 + VAT to arrange a bank transfer (required to pay off mortgage, transfer funds on completion etc.) or other extra fees where the property is leasehold, new build, unregistered or whatever because this really does involve extra work and we are already operating on practically zero margin.

The problem arises when clients are not informed of these costs up front (and some firms do hide them away in the small print – I worked out that one firm quoting £350 as a flat fee actually rose to £600 by the time their standard extras had been included). It’s always best to ask what extra fees you could be charged, especially if the quote is low. Be particularly cautious of any firm that would charge you extra money if completion takes place sooner than they would like. For example, I once worked at a firm with a policy of charging an extra £150 + VAT if completion took place sooner than two weeks after exchange. The idea was to deter clients from insisting on completing a few days after exchange, which creates extra work. In practice it was rarely charged (and I have since found that there are more effective ways of achieving this aim). However, one of my colleagues used to deliberately agree completion dates without reminding the clients of the penalty fee. The result was a surprise £300 + VAT on her clients’ bills (for a sale and purchase).

Online quotes
As you have seen, it’s quite easy to prepare a quote, given some basic information, and it follows that it is very easy to write a script to give quotes on your website (I have written some myself so I speak from experience). If a firm doesn’t have an online quote you might be justified in wondering if they are quite ‘with it’ technologically (although they might just be trying to hide their costs from the competition).

Conclusion
I hope this article has been helpful to you and welcome feedback via comments.