Exchange and completion: when you are bound to buy

England and Wales

Before exchange, nothing binds you. GOV.UK says a verbal offer can be renegotiated at any time up to exchange, and that a property marked “sold subject to contract” has yet to exchange, “so it is not legally binding”. The practical consequence is that either side can withdraw, and a seller can still entertain another offer. This is what people call gazumping. The GOV.UK guide does not use the word, and I found no official source in England and Wales that stops it.

At exchange. Signed contracts bind buyer and seller. Before exchanging, GOV.UK says you should be satisfied with the searches, the survey and the contract, and your lender should have confirmed the mortgage. You need buildings insurance in place, since you become legally responsible for the property when you sign. Withdrawing after exchange can cost you the deposit and may require compensation to the seller.

The deposit. It is paid through your legal representative at exchange and is a percentage of the purchase price (GOV.UK). The pages I read give no standard percentage for England and Wales: your contract states it. Help to Buy ISA and Lifetime ISA bonuses are claimed via your legal representative at exchange; the Help to Buy ISA bonus cannot be used toward the deposit.

Completion. Your legal representative transfers the remaining funds to the seller’s legal representative and you take ownership. Keys are often handed over around lunchtime. Exchange and completion can happen on the same day.

After completion. Your legal representative registers the change of ownership with HM Land Registry (see the title register guide) and handles the tax. Stamp Duty Land Tax in England is due: send the return and pay “within 14 days of completion” (GOV.UK). Wales uses Land Transaction Tax.

Scotland

There is no exchange of contracts. The sequence, from mygov.scot:

1. Your solicitor sends your offer as a letter. If several buyers have noted interest, the seller sets a closing date for offers.
2. The seller’s solicitor replies with a qualified acceptance: acceptance subject to conditions.
3. The solicitors negotiate through missives, letters exchanged to agree the conditions.
4. “Once the missives are accepted and both you and the seller agree on the terms, you have a binding contract.” Pulling out afterwards can make you liable for damages.
5. Settlement usually happens on the agreed date of entry. Your solicitor confirms to your lender that the home is in your name, collects the loan cheque and your contribution, hands over the funds and receives the disposition (the transfer document), the title deeds and the keys. Your details are then entered in the land register.

The pages I read do not mention a deposit in Scotland. Ask your solicitor whether one applies to your purchase. The tax is LBTT. See also buying a home in Scotland.

Northern Ireland

nidirect gives the order as: offer, solicitor, survey, mortgage application, exchange of contracts, completion. It states that exchange is the point where the sale becomes legally binding, that both solicitors get the buyer and seller to sign, and that you will usually pay the seller a deposit of at least five per cent of the house price at exchange. At completion, your solicitor arranges for your mortgage company to pay the balance to the seller’s solicitor, the house becomes yours and you move in on the agreed date. nidirect gives around two to three months as the usual time to buy. Stamp Duty Land Tax applies in Northern Ireland as in England (GOV.UK); the rules are in the SDLT guide. See also buying a home in Northern Ireland.

Side by side

Which professional to consult

A conveyancer manages exchange or missives and completion. A mortgage adviser confirms that the loan will be released on the date needed.