When you buy or sell a property in the UK, there are various fees payable to a solicitor. But you may have heard of disbursements too. What are disbursements, exactly? We look at this important term while answering other frequently asked questions about solicitors’ conveyancing fees.
FAQs
What are disbursements?
Disbursements are payments a solicitor makes on your behalf and then add to your bill, during the process of buying or selling a house. There are various fees and charges that the solicitor will have to pay to complete the conveyancing on a property purchase or sale. They often pay these fees upfront, and then charge them back to the client at cost value, without any additional fees.
What are some examples of disbursement payments?
Disbursements usually cover the standard fees for searches, transfers, copies of documents and land registry payments. Some examples include local authority searches, environmental searches and bankruptcy searches. They can also include stamp duty, land registry document fees and money transfer fees.
What’s the differences between disbursements and expenses?
Disbursements are costs that come up as part of the conveyancing process, whereas expenses are the charges incurred by the solicitor. Generally, a solicitor’s “expenses” will mostly be made up of whatever they charge for their time and expertise. Other expenses might include things like the solicitor’s travel costs or accommodation.
Who pays disbursements?
Both sets of fees, disbursements and expenses, are ultimately paid by you, the property buyer/seller. These two sets of fees represent the the sum total of the legal costs involved in the conveyancing process.
Why do solicitors charge disbursements?
Solicitors charge disbursements separately to expenses because it allows you, the client, to more easily understand the costs involved. The actual process of paying disbursements can be time consuming and complicated, so a solicitor will pay them on your behalf to simplify everything.
Do you pay disbursements to a solicitor upfront?
You’ll typically pay some disbursement after completing the sale, such as stamp duty. Other disbursements such as local authority searches require payment upfront before conducting the search, so your solicitor may ask you to pay these upfront.
Are disbursements payable in addition to solicitors’ fees?
Disbursements are payable in addition to solicitors’ legal fees and standard charges for completing conveyancing services. That’s because solicitors’ fees cover the work they carry out for you. In contrast, disbursements simply cover the costs of the necessary expenses during the conveyancing process.
Do you still pay solicitors fees if the sale falls through?
If a property transaction falls through because a buyer pulls out, you may still be liable to pay your solicitor’s fees. Some solicitors may carry over their fees to when you do eventually complete the sale of the property, while some may charge you for the time they’ve already spent on the work. If you take the property off the market, your solicitor may invoice you for the work they’ve completed to date.
How much do solicitors charge for conveyancing?
The Home Owners Alliance states that conveyancing fees typically range from £300 to £1,500. However, the cost of disbursements is added on top of this. Disbursement costs vary depending on the value of the house, with stamp duty being the main expense in this category.
How much is the average stamp duty charge in the UK?
Stamp duty ranges from 5-12% in the UK, and the first £250,000 of the property’s value is stamp duty free. This means you only start to pay stamp duty if the value of the property you want to purchase is above £250,000, with various bands charged at increasing percentages. Use a stamp duty calculator if you’re unsure what to expect.
Do you pay VAT on disbursements?
Some disbursements incur VAT charges, whereas others don’t. For example, you don’t pay VAT on stamp duty (SDLT) because it is already a tax. However, you might pay VAT on an search or inspection carried out by the local authority or an environmental agency.
Is there any way to reduce the cost of disbursements?
Disbursements that are part of a conveyancing process are hard to avoid or lesson, since most of them are taxes or other legal requirements. The best way to lessen the potential costs of your disbursements is to make sure that your solicitor is reputable and transparent in their dealings. They should be keeping you informed of every disbursement at every step of the way, ensuring that nothing comes as a nasty shock at the end of the sale.
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