Sealed bids, solicitors making offers rather than estate agents and virtually no gazumping. How the home buying process in Scotland differs from England.
1. Prices and offers work differently in Scotland
Most homes in Scotland are sold through a 'blind bidding' system. That means the seller will ask for offers over or around a minimum price.
Interested buyers give sealed bids and suggest a timescale for moving in. The highest bidder will win and will be informed on the same day.
2. Gazumping is almost unheard of in Scotland
Gazumping is where someone sneaks in with a higher offer for a home when yours has already been accepted.
It's not illegal in Scotland, but it’s very unlikely to happen. That's because as soon as an offer's accepted on a home, it's taken off the market.
In Scotland, formal offers are put forward by a solicitor, rather than an estate agent.
The seller's solicitor will then write a qualified acceptance letter. So, once your offer has been accepted, you can feel much more secure that the home will be yours.
The buyer's and seller's solicitors then enter into a process of negotiations with formal letters known as 'missives'.
Once the final acceptance letter has been issued, the missives are said to be concluded and the buyer and seller have entered into a legal contract.
3. Scottish sellers must provide survey reports upfront
If you're selling a home in Scotland, you need to commission a Home Report before it can be listed.
A Home Report contains a survey, a report on the home’s energy efficiency and a detailed questionnaire, which the homeowner must fill out.
There are exceptions. For example, new-builds don’t require a Home Report. But the majority of homes in Scotland will.
The only upfront information required in England and Wales is an energy performance certificate.
In England and Wales, once an offer has been accepted, the buyer can then choose to organise (and pay for) a survey of the property.
4. How do I know what to bid for a property in Scotland?
It's a good idea to check the Home Valuation report to give you a steer. It gives a good indication of what the property is worth.
Find out how long the home has been on the market and how many 'notes of interest' it's received to gauge demand for it.
It can all be about location, location, location so think about the area that it's in.
Popular properties in sought-after areas may attract bids 20% above the 'offers over' indication. Less popular properties may attract just 5%.
Some homes, but not many, are also sold at a fixed price in Scotland. When that happens, the first person to offer the amount will snag the home.
This type of sale happens when market conditions are challenging or the seller wants a quick sale.
In England and Wales, homes are marketed by estate agents at an 'advertised price'. This is negotiable and buyers are only tied in after their contracts have been exchanged.
5. Scotland has its own version of stamp duty
Stamp duty in Scotland was replaced in 2012 by Land and Buildings Transaction Tax (LBTT).
The tax applies to homes worth more than £145,000.
Here's how it's calculated:
Land and Buildings Transaction Tax in Scotland
|Property price||Land and Buildings Transaction Tax rates|
|£0 - £145,000||0%|
|£145,000 to £250,000||2%|
|£250,000 to £325,000||5%|
|£325,000 to £750,000||10%|
In England the stamp duty threshold is £125,000.
Stamp duty in England
|Property price||Stamp duty percentage to pay|
|£0 - £125,000||0%|
|£125,000 - £250,000||2%|
|£250,000 - £925,000||5%|
|£925,000 - £1.5m||10%|
In Wales, Land Transaction Tax (LTT) applies to properties of £180,000 or more.
Land Transaction Tax in Wales
|Property price||Land Transaction Tax rates|
|£0 - £180,000||0%|
|£180,000 - £250,000||3.5%|
|£250,000 - £400,000||5%|
|£400,000 - £750,000||7.5%|
|£750,000 - £1,500,000||10%|
First-time buyers in Scotland only pay LBTT on homes worth £175,000 or more.
First-time buyer Land and Buildings Transaction Tax rates in Scotland
|Property Price||LBTT rates for first-time buyers|
|£0 - £175,000||0%|
|£175,000 - £250,000||2%|
|£250,000 - £325,000||5%|
|£325,000 - £750,000||10%|
In England, first-time buyers get a stamp duty exemption on the first £300,000 of the value of all properties up to £500,000.
|Property price||Percentage of stamp duty paid|
|£0 - £300,000||0%|
|£300,000 - £500,000||5%|
|£500,000+||Normal stamp duty rates apply|
6. A sale is legally binding earlier in Scotland
Once an offer is accepted in Scotland, the buyer’s solicitor will confirm their mortgage, agree a move-in date and start the legal work.
Instead of exchanging a single contract, as is the case in England, solicitors in Scotland will exchange a series of formal letters, known as the missives.
Once the missives are concluded, the deal becomes legally binding.
This means the seller must convey the legal title of the property to the buyer. If they don’t, the buyer has the right to be released from the contract and claim damages.
In England and Wales, no legally binding agreement exists until contracts are signed and exchanged. Either party can withdraw from sale up to this point.