What are disbursements when buying a house


What are disbursements when buying a house

Thu 26 Oct 2017 by Lorraine Imhoff

When you obtain a quote from a Conveyancing Solicitor, it will show a number of additional items called ‘disbursements.’

This rather old-fashioned word describes all the fees and taxes which the Solicitor will have to pay out to other organisations as part of the house-buying process.

Of course you will have to pay the money to the Solicitor at some point – you may be asked for a payment up-front to cover various search fees, while other fees and taxes only have to be paid over when the purchase is due to be completed.

When you get an instant conveyancing quote through us, we are transparent about the fees as well as likely disbursements for your purchase.

These fees do not form part of the Solicitor’s own costs or charges.

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They are usually paid through your Solicitor because this is more convenient – in many cases the organisation concerned will only accept payment through a Solicitor.  

Some of these fees can be determined when you ask for a quote, as they are either a fixed amount or are calculated by reference to the purchase price.

Other fees may depend upon other factors – councils each set their own fees for local searches, and some searches only need to be made if the property is in a particular area, or if the buyer wants one made.

When a Conveyancing Solicitor collects payment for these disbursements, he or she is not making any additional charge to the buyer for making the search or payment, unless this has been clearly mentioned in the quote. Nor does the Solicitor receive any commission or discount when making payments. You can call one of our property experts if you need some impartial advice about the process: 0800 038 6699.

These are the usual payments which will usually have to be made when buying a home:

  • Local search fee – made to the local council for the district in which the property is located. Local searches are important to make sure there are no hidden surprises such as a new motorway or railway at the bottom of your garden, or outstanding planning notices requiring you to remedy an earlier building error. The council will provide information on a variety of topics, such as
    • whether or not the roads adjoining the property are publicly maintained
    • if major road schemes are planned near to the property, or minor schemes abutting or affecting the property
    • a list of planning decisions affecting the property
    • whether the property is a Listed building or is in a conservation area
    • a list of building regulations affecting the property
    • whether there are any public footpaths crossing or next to the property (important for rural properties.) 
    • whether the council has paid any grants to the owner which will have to be repaid
  • Drainage and Water search fee – paid to the company responsible for local drainage and water supply, this search obtains detailed information of water and drainage connections to the property. 
  • Land Registry search fee – the land registry is a government agency which is responsible for maintaining the register of property titles. When buying a house, the buyer’s Conveyancing Solicitor will have received a copy of the seller’s title before contracts are exchanged. Just before final completion the buyer’s Conveyancing Solicitor will ask the registry to check that there have been no changes to the register (such as a new mortgage, or a notice of the seller’s bankruptcy) since the copy title was issued – in other words, to make sure that the seller is still entitled to sell. (as the search fee is only quite small, some Conveyancing firms do not collect this fee separately.)
  • Bankruptcy search – if you are getting a mortgage, your Conveyancing Solicitor will have to check that you have not been made bankrupt just before completion. (this fee is also quite small, and is often not collected separately.)
  • Land Registry transfer fee – following completion of the purchase the change of ownership has to be registered, together with details of any new mortgage on the property.
  • Stamp Duty Land Tax (often just called stamp duty or SDLT) – this is a tax payable to the government on most property transfers. At present duty is only payable on properties over £125,000. The land registry will not complete registration of a property transfer until it has evidence that any tax has been paid.

A number of other disbursements may also be payable, depending upon the type and location of the property, and whether additional searches are requested.

These include:

  • Environmental search – carried out by a specialist company, this will report on any perceived environmental problems which could affect the property. Such searches are particularly recommended on homes near industrial areas or where industry has been carried on in the past. 
  • Planning search – an ordinary local search only provides details of planning matters for the property being purchased. If a buyer wants information about planning consents and applications on nearby properties, or details of local planning zoning, an additional search can be made.
  • Flood risk report – recommended on homes which are located in areas where there is a high potential risk of flooding, whether from sea, river or some other source.
  • Coal search (and brine-pumping search) – recommended for homes in areas where coal deposits are known to exist, whether or not there is any evidence of mining. Such a search will show whether there are any records of old mine workings in the vicinity, as well as details of any previous subsidence claims. Homes in some parts of Cheshire may also require a search to ascertain if they are affected by brine (salt) pumping operations.
  • Tin and other mining searches – tin and other metals have mined in some parts of Cornwall and Devon and a search can be made to find out if a house might be affected. Other metal ores and stone have been mined in many parts of the country, and it may be advisable for a report to be obtained if a property is located in one of these areas.
  • Chancel search – some homes may be liable to have to contribute to the cost of repairing the local parish (Church of England) church. In the past any such liability did not have to be noted on a property’s title register, so it has been necessary to make a separate search to ascertain of there is any potential liability. From October 2013 all such liabilities must be registered at the land registry if the property’s title is registered, so a separate search will now only be required if the title is still unregistered.
  • Landlord’s registration fee - when buying a flat (or other leasehold property) fees may be payable to the freeholder or his agents for registering details of the change of ownership and the buyer’s mortgage (if any.) 

This list is not exhaustive, and other fees may be payable for some properties.

Your Conveyancing Solicitor should explain exactly what is required – this will normally be done at the start, but some fees may only become apparent during the course of a transaction.

If you are a cash purchaser and do not require a mortgage then you can decide to take a risk and dispense with some or all of the searches. However the land registry fees will always be payable, together with SDLT if the property is worth over £125,000. But if you are getting a mortgage, the lender will dictate which searches are required.

The amounts payable for these various searches, fees and taxes are fixed by the organisations to whom payment is made, or by the government. A quote will show the fees etc. at the time the quote is issued, but they do sometimes change afterwards – for instance the government might change SDLT rates in the budget. 

If this should happen you will have to pay the new amount. Of course if a fee comes down before payment has to be made then you will only have to pay the new amount.

If your Conveyancing Solicitor has collected payment for a fee but then does not have to pay it to someone else (e.g. if you decide that you do not require a particular search) then the fee must be refunded to you. However once a particular search has been ordered from the provider it cannot usually be cancelled. If a lower amount has to be paid than has been collected, any balance should be refunded to you.

Buyers sometimes ask why they make these payments via their Solicitor and not direct.

In fact a cash buyer could settle some search fees direct if they wished, as well as paying SDLT. 

In practice it is usually more convenient for the Solicitor to make the payments; often a payment has to be made when a search is ordered, or the Solicitor will have an account with the organisation concerned.

Some searches can only be ordered through companies which do not deal direct with members of the public.

When a buyer requires a mortgage, the Solicitor will need to make sure that SDLT and land registry fees are paid to ensure that the mortgage gets registered.

If you would prefer to work with a solicitor who is transparent about their fees, has fixed fees, and a no move, no fee guarantee, then run a quick conveyancing quote here. Your instant quote will detail any likely disbursements as well as the legal fees for the conveyancing. Alternatively, you can call Homeward Legal on 0800 038 6699 to discuss your upcoming purchase, sale, remortgage or transfer of equity.

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