Stage 1 – Identifying a property & paying a holding deposit

Once a purchaser (“you” or “your” as applicable) decides to buy a property, a holding deposit is normally paid to the vendor’s solicitor.  In most cases estate agents represent vendor sand they will usually request a 2% deposit, which is payable by you, in orderto take the property off the market. This 2% deposit will later be deducted from the purchase price.

Stage 2 – Investigating title & exchanging contracts

The next stage is for you to instruct lawyers who will initially carry out a search at the Land Registry and investigate title to the property. This is to ensure that title to the property is properly constituted and that there will be no mortgages secured against it on completion. In addition, Preliminary Enquiries Before Contract are sent to the vendor’s solicitor. The enquiries cover a variety of matters relating to the property such as whether alterations requiring consent or planning permission have been made to the property, whether Energy Performance Certificates have been obtained and whether the vendor has experienced problems with neighbours or the management company, etc.

A purchase agreement is then drawn up by the vendor’s lawyers and delivered to your lawyers for approval. This agreement will set out the purchase price and the terms and conditions under which the property is being sold.  Until a purchase agreement is signed, negotiations take place on a “without prejudice” and on a"subject to contract” basis. This means that until both sides have signed the agreement, no binding contract exists for the sale and purchase of the property. The signing of the purchase agreement by both sides is also known as “exchange of contracts”.

After exchange of contracts, both sides are under an obligation to complete the transaction. If a party does not complete after exchange of contracts, the other side can sue them and force the defaulting party to fulfil the conditions of the purchase agreement. The defaulting party will be liable for all costs and consequences resulting from non-completion. In practice, this rarely occurs.

If a purchaser or vendor pulls out before exchanging contracts, he/she will not usually be liable to the other side. If a holding deposit has been paid to an estate agent, the deposit shall be returned in full to the prospective buyer. However, this will depend upon the terms under which such deposit was paid to the estate agent which should always be “subject to contract”. Most estate agents will ask you to sign a memorandum of sale or a reservation agreement. You should read the terms of these carefully and, ideally, ask your lawyers to review before you sign.

Stage 3 - Completion

The next stage is for your lawyers to draw up a Deed of Assignment, if the property is leasehold, or a Deed of Conveyance, if the property is freehold. This deed is approved by the vendor’s lawyers and by all parties to the transaction. These will often include the management company of an estate and the original developer (as lessor). This deed is the document by which you will become the owner of the property.

Once the deed is approved, a completion statement will be drawn up by your lawyers. This will include details of the purchase price to be paid, the amount of money being advanced by a bank or building society (if you are taking out a mortgage) and stamp duty and registration charges payable to Government.  At this stage your lawyers will ask you to provide the balance of all required funds needed to complete the purchase of the property. These funds will be paid into your lawyers’ client account and payment will be made by them to the vendor’s lawyers.

If you are obtaining a mortgage, funds will be requested from the bank or building society by your lawyers. You will only need to provide the balance of the required monies over and above the amount of the mortgage advance.

Once the deed is executed by all parties and the purchase price paid, such deed, the original historic title documentation and the keys to the property will be handed over to your lawyers. At this stage completion will have taken place and you will become the owner of the property.

Stage 4 – Registering the deeds & paying stamp duty

All properties purchased for £200,000 or less are exempt from stamp duty. If you are a first or a second time buyer, the threshold is £300,000 and your property purchase will also be exempt from stamp duty.

All mortgage deeds need to be registered too and there are two stamp duty thresholds. If borrowing £200,000 or less 0.13% of the amount borrowed is paid in stamp duties. If borrowing more than £200,000, 0.2% of the amount borrowed is paid in stamp duties.

In all other cases, stamp duty needs to be paid to the Gibraltar Government through the land Registry as set out in the “Stamp Duty” section below. The deeds to your property also need to be registered at the Land Registry and extra costs are payable to effect this.

Please see our guide below with full details on the payment of stamp duty. You can also use our Conveyancing Calculator to work out your full expenses.

The same steps outlined above in the guide to selling a property in Gibraltar are followed with some differences as set out below.

In the first stage, the vendor (“you” or “your” as applicable) needs to find a buyer for the property which is normally done by engaging one or more estate agents. Once a buyer decides to buy your property, he/she will normally pay a 2% holding deposit upon which your property will be taken off the market. The 2% deposit will be kept by the estate agents once completion takes place.  This is their fee and it is deducted from the purchase price on completion. In effect, you pay this fee and you will receive 2% less on completion. Some estate agents will charge less than 2% and this is a matter for negotiation between you and them.

‍

At the second stage, the process is the same except that it is the purchaser’s lawyers who investigate title to the property. Your lawyers will need to provide answers to questions on your property which normally take the form of “Preliminary Enquiries Before Contract”

‍

At the completion stage, the process is the same except that your lawyers will receive the proceeds of sale in their client account (less any deductions). The net proceeds of sale will then be paid by your lawyers to you.

‍

The final stage is different in that you do not pay stamp duty on the proceeds of sale; this is only paid by purchasers. However, if you took out a mortgage secured on your property, this has to be paid back to the bank or building society and stamp duty of 0.03% is paid on total amount of the money advanced to you by way of mortgage.