The Costs of Moving home
From the taxman to estate agents, we look at the expenses you’re likely to face when moving to a new home.
Whether you’re buying your first or second or third property, preparation is key to keeping the stress and expense of moving home to a minimum. One important consideration when moving is having a plan which sets both your costs, and your repayment terms, so you can have an accurate idea of what you will need to have at your disposal.
The following rules apply in England but are similar in Wales, Scotland and Northern Ireland.
Estate agents’ fees
This is what you pay the estate agent to sell the property. It’s essentially a percentage of the sale price, or a flat fee.
If you’re buying a property but don’t have one to sell, you shouldn’t have to pay the estate agent a penny; estate agents are instructed by vendors, so they have to foot the bill.
The traditional high-street estate agent usually charge a fixed percentage of the eventual selling cost of the property. On average this is between 1% and 2% but can be as high as 3% in some cases. New rules mean that all agents must price their services to include standard VAT (at 20%), so make sure you ask this question before you sign a contract.
You can choose to sell your own home. That’s the power of using an online estate agency service. New online agents can work out considerably cheaper than high-street firms. But sellers are likely to end up doing more of the work themselves – from taking photos of their home to handling viewings with prospective buyers. These are key tasks that usually require an agent or broker. Either way, online agents tend to charge a fixed fee, typically of between £500 and £1,000.
When deciding whether or not to sell a property online, there are a few things sellers should keep in mind. First off, they should be aware of any fees their online service might charge: this is an important consideration, since if your service does not find a purchaser, you will still have to pay them.
In most cases agents’ fees generally aren’t payable until your home is sold.
Mortgage Costs
You may be including the cost of arranging a mortgage for the property you are buying in your budget, but there are likely to be a number of costs associated with the new loan.
You want to shop around and get the best deal available. As well as factoring in depositing and your borrowing amount, look at the fees too.
The total cost is important as you’re looking for the best deal for you.
The most common fees include
Arrangement fee – these can range from zero to £2,000, and may also be known as a product fee.
For a fee, some loan providers allow you to ‘reserve’ the deal. But you may lose money if the transaction falls through.
Valuation fee: lenders will assess the value of the property you are asking to borrow against. The fee for doing so will typically be a few hundred pounds, and more in the case of higher-value or more unusual properties.
In general, you have to pay any charges related to your remortgage – these include arrangement fees, legal fees and mortgage broker fees – on completion of the mortgage In some instances, you can include the fees in your remortgage balance. This type of arrangement is often known as ‘capital and interest’ (‘capital’ is the money you’re borrowing, ‘interest’ is the charge for borrowing it). Adding arrangement fees, legal fees and mortgage broker fees to your mortgage balance means you repay them, with interest, along with the remainder of your mortgage balance. This isn’t ideal – you’ll be paying interest on fees – but it could be a viable way to raise funds.
The condition of the property
It is not obligatory to have a survey done on the property you buy, but it is a very good idea. A surveyor can identify any structural issues and make sure there are no problems with the fabric of the home. Your mortgage lender will be sure that the property has a valuation carried out. But this will not assess the condition of the property in any detail.
If you’re looking to find out more about a property before you make a substantial investment in it, the best way to do so is by hiring a professional surveyor. There are different types of survey available depending on the level of detail you want the surveyor to go into: A Homebuyers Report is recommended for properties that are more than 25 years old and are relatively well maintained. This detailed report usually costs between £450 – £850 Most lenders will allow you to upgrade from their standard valuation to a home buyers report for an extra cost.
The cheapest option for a pre-purchase survey is a Condition Report, offering a summary of the condition of the property for a cost of around £300 to £700, depending on the size of the property. This is recommended as the first step for a first-time homebuyer and will give you a good overview of the property. However, a Condition Report doesn’t provide as detailed a look at the potential problems a house may have as a HomeBuyer Report. A HomeBuyer Report is usually conducted by a chartered surveyor and bear the logo of the Royal Institution of Chartered Surveyors (RICS). This detailed report provides a look back at the property’s history, as well as information on any structural repairs and recommendations regarding extensions. It also provides advice on drainage and any potential legal issues, such as boundary disputes. A HomeBuyer Report will usually cost between £450 and £850 and is recommended for home buyers who want more detailed information, either when buying their first home or even when they move up to a larger house.
For properties where you have greater concerns, a full structural survey will provide a comprehensive overview at a typical cost of between £600 and £1500
Meanwhile, a seller must provide an EPC to a buyer(s): this sets out the energy efficiency of the property, looking at factors such as lighting and heating. An EPC is drawn up by a specialist domestic energy assessor and, depending on the complexity of the property, can cost anywhere between £60 and £100.
Surveyors fees will generally be due upon completion of work.
Conveyancing
Conveyancing is the process of transferring legal title of a property from one person to another whether by sale, gift or deed.
Remember that getting the legal side of buying and selling property right is crucial. You will need to instruct solicitors or a conveyancing firm to handle your purchase and/or sale.
The responsibilities of conveyancers vary from firm to firm, but generally include dealing with the sale or purchase of a property, the transfer of money or land from one owner to another, or the granting of a lease on a property. They will be able to offer advice relating to issues identified by the valuers report.
Fees can vary from one professional to another, and you need to know at the beginning of the service that you are likely to have to pay an hourly rate, your solicitor or conveyancing attorney will be able to give you a guide on costs to start with, though the cost may increase depending on circumstances.
As a rough idea, expect to pay around £1,000 when buying or selling a home. There may be fewer checks to carry out when selling a home than buying one, however, so be sure to ask your estate agent to explain exactly what they’re doing to get your moving process started. Your legal professional would usually bill you once the transaction has been completed.
Stamp Duty
Buyers must pay stamp duty land tax on any property purchase they make. The stamp duty system has changed in recent years, and the tax is now levied in bands, just like income tax.
Properties in England and Northern Ireland valued under £125,000 are now tax-free. If you are purchasing a second property higher rates are imposed. First time buyers are exempt from stamp duty up £300,000- Use an online stamp-duty calculator to work out how much you will have to pay.
Stamp duty is payable upon the purchase completes.
Removal costs
Moving into your new home can be time-consuming and stressful. Whether you’re moving for a new job or starting a family, you’ll have a lot to think about. This is where some people will choose to use a professional removal company. Average costs here are between £300 and £600, depending on the amount of possessions you have, the distances involved and whether you have your items packed for you.