Buyer's guide to the legal process

Unlike property in some other countries, UK property can be owned by anyone or virtually any entity: companies, trust structures or individuals whether UK resident or not.

For overseas buyers, there is a well-established process in place for acquiring UK residential property. The process is slightly different depending on whether the property is “new build” or “second-hand”, but the majority of UK property transactions can be summarised broadly in the following three stages:

Stage 1. Reservation

A buyer will reserve a property that he / she wishes to acquire for an agreed purchase price by either agreeing a memorandum of sale or signing a reservation form and paying a reservation fee (which is usually non-refundable). At this stage, the buyer has not entered into a legally binding agreement. The reservation will normally afford the buyer a period of exclusivity in which he / she can seek to formalise the acquisition of the property without fear of incurring unnecessary or wasted costs.

Stage 2. Contract

Following agreement of a reservation, both the seller and the buyer will instruct lawyers. The seller’s lawyers will prepare a sales pack containing all of the relevant documentation pertaining to the property and will send it to the buyer’s lawyers for review. This will include the draft contract and evidence of the seller’s ownership of the property. The buyer’s lawyers will then examine the paperwork, lodge investigative searches with the relevant statutory authorities and undertake full due diligence on the documentation.

The result of that due diligence, which is a summary of the investigations and enquiries that the buyer’s lawyers have undertaken in respect of the property, is a Report on Title which is delivered to the buyer prior to contracts being formalised. The parties’ lawyers will then agree the exact wording of the contract. The terms may vary from one transaction to another depending on the agreement between the parties and the property in question.

The buyer will purchase the property by reference to its official UK Land Registry title or (if the property is “new build”) a set of plans and specifications setting out what the developer is agreeing to construct. It is vital to check what is included in the purchase price. If there is an exclusivity period, contracts must usually be formalised by the agreed deadline.

If the buyer decides to proceed with the purchase, he / she will sign the contract and return it to his / her lawyer so that something called “exchange” can take place. Exchange of contracts is the moment when both parties become locked in to the transaction. On basic terms, it means that both parties have signed an identical copy of the contract and their lawyers have handed over their signed copy to the other party - an exchange of documents. Once contracts are exchanged, both parties are legally bound to the sale and purchase of the property and may not subsequently withdraw from the process.

The buyer should ensure that he / she has the ability to put in place the necessary funding for completion (and any requisite stage payments). Usually a 10% deposit is payable upon exchange of contracts. Depending on the contractual terms, a larger deposit or stage payment(s) between exchange and completion may also be required. It is important for a buyer to take legal advice from a reputable solicitor to make sure that, if possible, any deposit payments are properly protected by way of suitable contractual provisions or a warranty.

Stage 3. Completion

Completion of the transaction will take place on an agreed date or (if the property is “new build”) on the date when the property is ready for occupation. At this point the buyer will pay the balance of the purchase price (less any deposits already paid) and will be given the keys to the property. In the case of “new build” property purchases, completion is normally on notice from the seller that the property is finished in accordance with the plans and specifications referred to in the contract. A surveyor may inspect the property for any outstanding snagging items prior to completion. Again, it is important that a buyer takes comprehensive legal advice to make sure that the contract contains adequate protections to ensure that the completion process must be undertaken properly. In the run up to completion, the buyer’s lawyers will prepare a completion statement setting out the funds required from the buyer to complete. This will include the balance of the purchase price of the property. Other standard costs include legal fees, stamp duty land tax (SDLT), Land Registry fees and standard “out of pocket” disbursement costs.

SDLT - this is the government purchase tax payable on the purchase price [proportions of which fall into a relevant division as set below], currently calculated on a threshold basis.

There are separate provisions for properties bought in corporate envelopes where SDLT of 15% is applicable on any purchase above £500,000. An Annual Tax on Enveloped Dwellings (ATED) is also payable and will apply to all corporate envelope ownerships valued above £500,000 from April 2016. In both cases an exemption will be made if the property in question is being let on a commercial basis to an unconnected third party.

Land Registry fees also apply.

On completion, the buyer’s lawyers will lodge details of the transaction at the Land Registry so that the buyer becomes the “registered proprietor” of the property which is effectively a UK Government guarantee of title.


At present, when it comes to property transactions, the UK very much welcomes overseas purchasers. As detailed above, the process of buying residential property is long established and there are no limitations on foreign investment. With a burgeoning private rental market in the UK, buy-to-let investments are currently very popular. Also, the tax system is relatively straightforward and any property lawyer will be able to explain the basic considerations in buying UK property. Buyers must be prepared though to take advice with regard to the structuring of the purchase of UK property, so as to ensure a proper understanding of the relevant tax consequences. This note provides an outline of the process of acquiring property in the UK and is for very general guidance only. It should not be relied upon as a substitute for specific or detailed legal advice.