Long completion - interest on deposit

mattyh

Hi there

We're just about to exchange contracts on a new-build which hasn't been built yet and won't be ready for legal completion until October. We are putting a large deposit down, which I assume will be taken by the solicitor when we exchange.

Question 1: Will the solicitor want the full deposit, or just 5%?
Question 2: Either way, can I get the interest back on this (considering it'll be over 6 months!!)

Thanks in advance!

distilled

Firstly, October is just an estimate at this stage. Add a couple of months to that. What deposit was agreed on reservation? Check the paperwork. Unfortunately you will not be able to claim back interest. Sorry to be the bearer of bad news.

Joannaclaire

We're ftbs with a big deposit we're been saving up and also with some help from the inlaws. Our plan is to play it cool and only saying we have 10% to the EA/vendor. That way we just pay the 10% on exchange and pay up the rest when we complete, or at least that's our plan. That way we hold on to our money and earn interest on it for a long as possible, and if things go awry, it means we have the money, not other parties.

inmypocketnottheirs

It is my understanding that solicitors acting as stakeholders have to pay over any interest collected, aslong as it is more than £20.

Sure someone will confirm.

distilled

The solicitor will pass the deposit on to the builder.

Ian_W

Joannaclaire wrote: Our plan is to play it cool and only saying we have 10% to the EA/vendor. That way we just pay the 10% on exchange and pay up the rest when we complete, or at least that's our plan.

No need to play it cool Joanna. No-one would ask or expect you to put down more than 10% on exchange. Your solicitor wouldn't [at least shouldn't] allow it anyway.

Having a large amount in cash to put towards a property strengthens your hand with both vendors and EA's. You'll be seen as a better prospect than someone who needs a 95 or 100% mortgage to buy.

As the old saying goes ... If you've got it, flaunt it!!

mattyh

I'm not sure that's right, i've found the following text at http://www.adviceguide.org.uk/nm/index/family_parent/housing/problems_with_buying_and_selling_a_home.htm

"
Interest on deposits

When a buyer pays a deposit on a property this is held by the seller’s solicitor or licensed conveyancer. Any interest earned on the deposit during the period is kept by the solicitor or licensed conveyancer (EW only) and should be passed on to the seller at completion. The seller may need to ask for the interest as it is not always passed on. If the solicitor or licensed conveyancer refuses to pass on the interest the seller should take this up with the Consumer Complaints Service or the Council of Licensed Conveyancers in England and Wales(Law Society in Northern Ireland).
"


Surely this is correct and solicitors aren't allowed to benefit from interest on deposits?

Also, from what your saying, despite our deposit being around 20%.. only the standard 5%/10% would be payable to the solicitor at exchange?

Ian_W

mattyh wrote:Also, from what your saying, despite our deposit being around 20%.. only the standard 5%/10% would be payable to the solicitor at exchange?

Yep. Whilst you consider you have a 20/40/80% or whatever deposit because you've got that in cash/savings, the deposit paid at exchange is usually 10%, though by agreement I believe it can be less, so your solicitor doesn't need the rest of the money until completion. Though the funds would have to be in a cleared form on completion day.

If you were a completely cash buyer you have a 100% deposit but your solicitor wouldn't need all of that on exchange. Point I was making was that Joanna wasn't disclosing her strengths as a buyer to EA/vendor on the belief that because they've got a sizeable "deposit" they would have to pay all of it at exchange, which I don't believe is the case. The fact that they have got a large amount in cash makes them a better prospect as a buyer, than say someone who will be applying for a 100% mortgage, so they should use that to their advantage, not hide it.

HTH.

mattyh

thanks for clearing that up.

Which brings me to my original point - surely someone benefits on the interest on my 10% for the 6 or 7 months between exchange and completion - and the article I pasted above indicates that the solicitor shouldn't profit!!

It's only going to be a couple of hundred quid, but hey this is moneysavingexpert after all....!

zappahey

mattyh wrote:

thanks for clearing that up.

Which brings me to my original point - surely someone benefits on the interest on my 10% for the 6 or 7 months between exchange and completion - and the article I pasted above indicates that the solicitor shouldn't profit!!

It's only going to be a couple of hundred quid, but hey this is moneysavingexpert after all....!

I think Distilled was suggesting that the builder holds the deposit not the solicitor. It's just another way that the builders stack the cards in their favour.

mattyh

no it can't be - lets not get the legal exchange-of-contracts deposit mixed up with the reservation fee I paid directly to the builder.

Lets ignore the fact it's a new build - lets assume it's a 'normal' sale with a long completion - surely the vendor wouldn't get to hold onto the buyers deposit before completion?