The short answer
Exchange is when the move becomes legally binding and the completion date is fixed. Completion is when the money changes hands and you get the keys. There's usually a week or two between them, though they can happen on the same day.
What exchange of contracts means
Up to this point, nobody is tied in. The buyer and seller have each signed a copy of the contract, but those signed copies sit with their conveyancers. At exchange, the conveyancers swap them, and from that moment both sides are legally bound to go ahead.
These days nobody posts a contract across town and waits. Exchange usually happens over the phone. The conveyancers on each side of the chain read out the agreed details, confirm everything matches, and agree that contracts are exchanged. They follow a set script written by the Law Society, called the Law Society formulae, so that everyone is bound at the same moment and nobody in the chain is left exposed.
Before exchange can happen, the buyer's conveyancer needs the searches back, the enquiries answered and the mortgage offer in place. Our guide to how long conveyancing takes walks through those stages.
The deposit
At exchange, the buyer pays a deposit. It's commonly 10% of the price, but a lower amount is often agreed, especially when the buyer is putting down a smaller deposit on their mortgage. Your conveyancer will need the money in their account before exchange, so they can send it over the moment contracts are swapped.
If you're buying and selling, the deposit from your sale can often be passed up the chain towards your purchase. Your conveyancer will talk you through how that works for your move.
If someone pulls out after exchange
This is why exchange is such a big step. A buyer who backs out after exchange can lose their deposit, and they can be liable for further losses the seller suffers too. A seller who backs out can be sued for the buyer's losses. In practice, it's rare, because walking away is so expensive.
Buildings insurance starts at exchange
If you're buying, you're usually responsible for insuring the building from exchange, not from completion. If the house burned down the day after exchange, you'd still have to buy it. Most lenders insist on cover from exchange, so arrange your policy to start that day.
The completion date is fixed
The contract you exchange includes the completion date. Everyone in the chain agrees it beforehand, and once contracts are exchanged it can't be changed without everyone's agreement. This is the date to book your removals for.
The gap between exchange and completion
The gap is commonly 1 to 2 weeks. That gives everyone time to book removals, give notice on a tenancy, and for the buyer's conveyancer to request the mortgage money from the lender.
Sometimes exchange and completion happen on the same day. This is called simultaneous exchange and completion. It can suit a cash buyer or someone in a hurry. The risk is that until contracts are exchanged, nobody is committed. If someone pulls out that morning, you could have a removal van packed and nowhere to go. We'll always explain that risk before you agree to it.
What happens on completion day
Completion is the day the property legally changes hands. Here's how it usually goes.
- The buyer's lender releases the mortgage money to the buyer's conveyancer. It's usually requested a few days ahead so it's ready to go.
- The buyer's conveyancer sends the purchase money to the seller's conveyancer. In a chain, money moves from one conveyancer to the next until it reaches the top.
- The seller's conveyancer confirms the money has arrived. That moment is completion.
- The seller's conveyancer tells the estate agent, and the estate agent releases the keys to the buyer.
Completion usually happens some time from late morning to early afternoon, but nobody can promise an exact time. A long chain, or a bank transfer that takes a while to arrive, can push it later. Sellers usually need to have moved out by an agreed time, so it's worth keeping the day flexible.
After completion
You've got the keys, but your conveyancer still has some work to do.
- Stamp Duty. If you're buying, a Stamp Duty Land Tax return has to be sent to HMRC, and any tax paid, within 14 days of completion. Your conveyancer normally does this for you. You can read more about it on the HMRC Stamp Duty Land Tax page. In Wales, the equivalent is Land Transaction Tax, which has its own deadline.
- Registration. The buyer's conveyancer registers you as the new owner with HM Land Registry, along with your lender's mortgage if you have one.
- The seller's mortgage. If you're selling, your conveyancer pays off your old mortgage from the sale money on the day, and sends you what's left.
How we help
You get a named conveyancer from day one, and updates on WhatsApp, so you'll know the moment contracts are exchanged and the moment you've completed. You pay a small amount to get started, and the rest is due on completion. If a chain wobbles before exchange, our guide to what happens when a chain breaks explains your options.
