Laura Gill, Senior Associate in the Residential Real Estate department, discusses fixtures and fittings agreements and how both buyers and sellers must be open about their expectations to avoid disputes.

Laura’s article was published in Today’s Conveyancer, 28 June 2023, and can be found here.

After a near decade-long legal battle, magistrates finally ordered the return of fixtures and fittings stripped from a £1.5m manor house by the seller after completion of the sale. The seller had, in the magistrates’ opinion, “systematically” removed any object that he could from the property ahead of handing it over to the buyers, including stripping it of doors, windows, fireplaces and floors. As such, he was instructed to hand back all of the missing items, including those recovered by police during their involvement in the case.

While an extreme example of disputes that can arise over what fixtures and fittings belong to which party in a property transaction, the situation serves as a cautionary tale to buyers and sellers alike when negotiating terms ahead of completion. To avoid anything like the situation the buyers found themselves in after the gutting of their new home in the aforementioned dispute, both parties should be open and upfront about fixtures and fittings during the early stages of the transaction and preferably at the point of offer.

While there are no specific laws or legislation stipulating what should be left or removed when selling a property, the Law Society Fitting and Contents Form (TA10) should be used under the Law Society Conveyancing Protocol. If any items fall outside the scope of this form, it is strongly recommended that a separate inventory of items to include their respective values be created to form part of the sale contract.

The TA10 form is annexed to the contract and forms part of the contract of sale. It is therefore legally binding on the buyer and the seller. If the seller removes anything listed as included in the purchase price from the property on completion, they may find themselves in breach of contract and liable to be sued.

Fixtures are defined as the items in a property that are attached to the building or the land, for example integrated appliances, kitchen units and worktops. They also include carpets, doors, built-in wardrobes, radiators, boilers and central heating systems.

Fittings are those items that are not attached to the property unless by a screw or a nail such as pictures and mirrors. Other examples include freestanding goods like fridges, freezers, washing machines and dishwashers that are not built in or fully integrated, furniture, beds and tables.

More often than not, sellers tend to include white goods in the purchase price, although they are not bound to do so, and can remove them if they have stipulated that they are going to do so. Buyers should always check the TA10 form to make sure this is the case. Depending on the age and value of these goods, the seller does on occasion offer them for sale to the buyer.

Items that should be generally left in situ and which a buyer would not ordinarily expect to be removed from the property are fixtures such as the doorbell, carpets, plug and light sockets, curtain poles and light fittings.

If, however, a seller wishes to remove a light fitting, they are required when completing the Property Information Form to confirm that they will replace such light fittings with a ceiling rose, flex, bulb holder and bulb. Buyers should check that the seller has confirmed this if they are expecting light fittings to be removed.

Another important factor to consider is Stamp Duty, which does not apply to removable fittings and contents. Any fittings attached to the property will be chargeable to Stamp Duty but, in most cases, Stamp Duty is attributable to the consideration (that is, the purchase price) without any apportionment to the attached fittings.

If both parties are agreeable, it is possible to negotiate a price for more valuable items that the seller may not wish to include in the purchase price in order to avoid disappointment for the buyer and ensure that when they move into their new home, they don’t find themselves short-changed.

The seller also avoids being in breach of contract if they have an understanding from the outset of what items need to be removed from the property on completion. If a seller has an onward purchase, it also helps them manage negotiations on what should be included in their related purchase property.

As such, the seller must be reasonable and transparent about exactly what is to stay and what is to go, and the buyer should also be open and frank about their expectations in this regard.

Director and Head of Residential Real Estate Goli-Michelle Banan highlights the calming of the UK housing market and positive trends related to reducing interest rates and lenders’ increasing willingness to lend.

Goli-Michelle’s article was published in FTAdviser, 6 April 2023, which can be found here, Mortgage Solutions, 30 January 2023, which can be found here, and in Today’s Conveyancer, 24 February 2023, which can be found here.

The UK housing market had a rollercoaster ride last year: house prices hit record levels, the Bank of England’s base lending rate increased nine times in the 12 months to December 2022, rising from 0.25% to 3.5%. It created a lull in market activity and put the brakes on property prices.

So, what next? Optimists argue that a crash will not happen with current mortgage rates predicted to fall by up to 25% this year. They also point to big lenders – HSBC, Barclays, Lloyds and NatWest – agreeing forbearance measures to help struggling borrowers: switching them to interest-only or competitive fixed-rate deals. Around 1.8m people will need to re-mortgage when their fixed-rate deals expire this year.

Schroders research shows that average UK house prices are more than eight-times average earnings; in London, that ratio rises to 11 times. Such stories make good headlines, but the economic mood is gradually changing – from general gloom to a more nuanced outlook. Notably, the shift in economic sentiment is reflected by reducing rates for new 2-year and 5-year fixed mortgages: after rising from 3 per cent in January 2022 to spike at 6.5 per cent last October, they have since fallen back towards the 5 per cent mark.

For potential buyers, interest rates are critical because they directly affect both affordability and lenders’ willingness to lend. After a decade of low interest rates, recent sharp swings have been unsettling.

Assorted lenders – Santander, Barclays, Nationwide and Halifax – now forecast imminent rate reductions to average around 4.5 per cent. Unusually, this comes as base rate is anticipated to reach 4 per cent later this month.

Mortgage rate cuts by big commercial lenders make the market more attractive and more affordable for domestic and first-time buyers – not just to overseas or cash buyers as happened when rates hit their recent highs. Despite media hype about reducing their mortgage lending, banks still have the appetite to lend.

After last year’s shocks, calm has returned. Much has been digested by the market, including the ‘new normal’ in interest rates. Potential increases are now factored into people’s thinking, so industry professionals can advise with greater confidence on where rates may head next.

Whenever the UK housing market is reportedly down, history shows it is never down for long. Buyers with available funding should press ahead on properties they really want. Good housing stock is not always available: in busier markets, people often lose out because of increased competition. Only those who are not yet able to buy should be waiting.

One caveat arises: UK incomes need to increase in real terms to boost domestic buyers’ purchasing power.  Without that, the market may still remain more attractive to overseas and cash buyers.

Director Steven Roskin explores trends in the first-time buyer market, and the factors affecting it.

Steven’s article was published in Property Today, 02 February 2023, and can be found here.

The UK residential property market has faced changes and challenges in the last few months, and this has led to a quieter period for estate agents and solicitors compared to the hectic market of the previous couple of years.

In the aftermath of the initial covid shock and stumble to the property market, we saw a very buoyant two years of transactions aided by the stamp duty holiday and the desire of people to move to different locations and property types. This was always going to taper off at some point, but it perhaps did so quicker than expected with the combination of increased cost of living, economic uncertainty and the infamous mini-budget which saw mortgage interest rates rise much more sharply than had been anticipated. Transaction levels gradually decreased between October 2022 and January of this year, and HM Land Registry records show the number of applications for transactions for value was 15% less in December 2022 compared to the previous December.

First-time buyers have of course been affected by the recent turbulence and have faced the biggest challenge of everyone in the last year: to get onto the property ladder. A few factors have contributed to this, and in the short term, the changes in the mortgage market have certainly played a part. Those that have worked hard to save a deposit have suddenly found themselves needing a larger deposit to get a mortgage. Many of them have also had to re-assess what they can afford, as increased mortgage rates meant monthly mortgage costs being hundreds of pounds more than they would have been six months ago.

At one stage, it was reported widely in the media that mortgage rates could reach 6-7% later this year, around three times higher than they were in the summer of 2022.

When adding in the increased cost of living, and in particular the energy costs associated with owning a home, it is not surprising that first-time buyers would have needed to pause and take stock before taking that big step in their lives of owning a first property. Other factors such as the ending of the government Help to Buy scheme in October 2022 (for new applications) meant assistance and incentives are currently harder to come by.

Despite these challenges we are still seeing first-time buyers active in the market and more generally there has been signs of an increase in interest and transactions as January has progressed. Estate agents that I have spoken to have reported being busy with viewings and ultimately deals being agreed including with first-time buyers. Perhaps the stock taking has largely concluded and an acceptance has set in that higher mortgage rates are here to stay but at least not looking likely to reach as high as was initially feared. The general principle remains that the UK is a country where aspiration for property ownership has always been strong. In addition, renting remains expensive, especially in the cities and so while the goal posts might have been shifted, the aspiring first-time buyer would understandably want to still get on that ladder.

To achieve this, it may require for the time being and in current circumstances that buyers stretch themselves that little bit further in terms of deposit and monthly mortgage payments. Some may need to make a new or amended application to the ‘bank of mum and dad’ to help them get what they want. There has also seemingly been a shift to more of a ‘buyer’s market’, meaning negotiation of price might be easier than it has been for the last couple of years.

Another change recently reported by lender Halifax showed that in the last decade there has been a noticeable increase in the number of buyers joining up to purchase a first property together. The report showed that 63% of first-time buyers purchased in joint names in 2022, compared to 43% in 2014. This is presumably down to property price increases generally in that period and the greater need to pool together resources to get on the ladder amongst younger buyers. It is nonetheless another example that while adjustments in expectations and circumstances may affect buyers and the market, the desire to buy and own property remains prevalent, and first-time buyers continue to be an active and important part of the market. The need for good financial and legal advice for these buyers is as great as ever, but first-time buyers are likely to remain as a high proportion of those buying, lending and driving the market forward.