A disbursement is a payment that has to be made to a third party, for example to HM Land Registry. The majority of disbursements are incurred when buying a property rather than selling.
Examples of disbursements are listed below. The disbursements incurred in each transaction are different and depend largely on the location and type of property you are purchasing.
This is not intended to be an exhaustive list and each transaction is different.
Once you have decided which Solicitor to instruct they will be able to discuss which specific disbursements are necessary or recommended for your particular transaction.
Stamp duty
If you are buying or transferring a property and it is liable for stamp duty the amount will be shown as a disbursement. Stamp duty is a government tax levied when a property is sold or transferred. This tax is payable by the buyer of the property or share in the property. Some properties are exempt from stamp duty because of where they are situated. For current stamp duty rates and details of stamp duty exempt areas visit www.inlandrevenue.gov.uk.
H M Land Registry fees
When you buy a property, take out a new mortgage or transfer a share in a property the transaction must be registered at the Land Registry. The Land Registry charge a fee for registering the transfer and this is on a sliding scale depending upon the price of the property. To check the current Land Registry fees visit www.landregisteronline.gov.uk.
Official Copy Entries and Filed Plan
When you sell or re-mortgage a property your solicitor will apply to the Land Registry for an Official copy of the deeds relating to your property and an Official Copy of the filed plan relating to your property.
Searches
When you buy a property or take out a new mortgage you will have to have certain legal searches carried out against the property. There are many types of conveyancing search but the most typical are:
The local authority search
This is a search of the registers of the local authority and covers the following matters:
Planning decisions and pending applications
The search must stipulate what applications for any of the following have been approved or rejected or whether there is a decision pending by the relevant authority:
Planning permissions
Listed building consents
Conservation areas
Certificates of lawful use of existing use or proposed use or developments
Building regulations approvals
Building regulations completion certificates
Planning designations plans and proposals
Highways
Land required for public purposes
Land to be acquired for road works
Drainage agreements and consents
Nearby road schemes
Traffic schemes
Nearby railway schemes
Outstanding notices in relation to building works, the environment, health and safety, housing, highways or public health
Contravention of building regulations
Planning enforcement. Notices, orders directions and proceedings under planning acts
Compulsory purchase
Contaminated land
Radon gas
Additional local enquiries
The local authority may also answer specific additional enquiries. The local authority charges an additional fee per enquiry. The conveyancer or HIP provider can also raise additional enquiries of the local authority in a separate written enquiry. The local authority charges an additional fee for this service.
Water/drainage search
This is a search of the registers of the water authority local to the property. It must cover the following matters:
Public sewer maps
Foul drainage and surface water
Public adoption of sewers and lateral drains
Public sewers within the boundary of the property
Public sewers near to the property
Building over a public sewer, disposal main or drain
Map of the waterworks
Adoption of water mains and service pipes
Sewerage and water undertakers
Connection to mains water supply
Water mains, resource mains or discharge pipes
Current basis for sewerage and water charges
Charges following change of occupation
Surface water drainage charges
Water meters
Sewerage bills
Water bills
Risk of flooding due to overloaded public sewers
Risk of low water pressure or flow
Water quality analysis
Water quality standards
Sewage treatment works
Environmental search
An environmental search is carried out with an agency that provides such searches. The law does not currently require local authorities to keep a register of contaminated land. An environmental search will check whether the land upon which the property is built has been contaminated. New properties are often built upon old landfill sites or upon sites that were previously used for commercial purposes. It is now a legal requirement that developers survey land intended for building to ensure it has not been contaminated. If it has been contaminated the developer must decontaminate the land before building upon it. However, this was not always the case and some property is built on land that is contaminated. An environmental search will also check whether the property is affected by flooding or other environmental risks or hazard (such as factories or commercial outlets nearby).
Mining searches
There are various types of mining carried out in the UK today. These include coal, chalk and tin. Your solicitor will check if the property you wish to buy is in a mining area and if so will carry out a search to ensure that the property has not been/will not be adversely affected by the mining activities.
Chancel repair search/check
In the past when the Church sold off or gifted land they sometimes required the new owner to pay towards the upkeep of the church or its lands. Some property is still subject to this liability. There was a recent case where one unsuspecting couple were forced to pay hundreds of thousands of pounds to the church because their property was subject to this liability. If you solicitor believes that the property you wish to buy may be subject to this liability they will carry out a chancel repair search/check.
Commons registration search
Some land was formerly ‘common’ land. This means that the public have rights to pass over it and occasionally to graze sheep and cattle, gather wood etc. If your solicitor suspects that the property you wish to buy may have been registered as ‘common land’ they will carry out a commons registration search. This search is typical upon properties that front a village green or common land.
Land Registry search
When you buy, transfer or mortgage a property your solicitor will search the Land Registry to check that no one has registered a claim or a right in the property since the Official copies were issued by the Land Registry. This ensures that you do not buy a property that has a financial charge or other right registered against it.
Land Charges search (also known as a bankruptcy search)
When you buy or mortgage a property your solicitor will carry out a search against your name in the Land Charges register. This search will reveal if you are currently bankrupt, are an un-discharged bankrupt or are about to be made bankrupt.
Telegraphic transfer fees
If you are buying a property your solicitor will have to send the purchase money to your seller’s solicitor by telegraphic transfer. If you are selling or re-mortgaging your solicitor may have to repay your existing mortgages or loans by telegraphic transfer. The bank makes a charge for this and the solicitor passes that charge onto you.
Local search indemnity insurance
If you are buying or re-mortgaging a property and do not want to have a full local search carried out, if your lender agrees, your solicitor can obtain local search indemnity insurance to protect your lender/you against any problems that might have been revealed in a local search.
Other indemnity insurance
Indemnity insurance is widely used by solicitors to deal with problems in deeds, leases, insolvency, restrictive covenants, missing landlords etc. This insurance is arranged by the solicitor and the premium is paid by you.
Leasehold disbursements
Your solicitor should not include any fee for dealing with a lease in the disbursements section as this should be included in their conveyancing fee. You will however find that you must pay your new Landlord a Landlord’s notice fee for registering you as the new owner and your lender as interested as a mortgage lender. If there is a separate management company you may have to pay a Management Company fee for registering you as the owner and your lender as the mortgage company. Occasionally, Landlords and/or Management companies may require new tenants to sign a document agreeing to obey the terms in the lease. This document is called a Deed of Covenant. The Landlord/Management company may make a charge for supplying and registering this deed. You may also find that you are asked to pay Ground Rent, Buildings Insurance and Service Charge in advance.
New properties and some ‘Right to Buy’ properties –
When you buy a property from a developer, the local authority or a housing association insist upon providing a standard form of Transfer deed. They usually make a charge for this known as an Engrossment fee which must be paid by you.
Value Added Tax (VAT)
Where VAT applies to the solicitor’s charges and the disbursements this will be shown.
Additional Leasehold Property Disbursements
The following disbursements may also apply:
A Notice Fee to the Landlord for stamping the Notice provided by your solicitor to the Landlord notifying that you are the new owner and details of your mortgage company. An average would be £75 plus VAT but this does vary enormously from nothing up to £200. It depends on the Landlord. Your solicitor will find this out and notify you at the earliest opportunity.
If there is a separate management company they may also require a notice and may also charge a fee. Again your solicitor will find out what this is and notify you as soon as possible.
Ground Rent/Service Charge. Sometimes the Vendor has paid in advance to the end of the year and you might need to repay part of this.
If it is a new lease there will be a small amount of extra stamp duty and land registry fees. This is worked out on the ground rent and the term of the lease and again the solicitor will notify you at the earliest moment.
