Sum total: the cost of moving home
From estate agents to surveyors and the taxman, we look at the expenses you’re likely to face when moving to a new home.
Whether you’re buying for the first time or taking a second or third step up the property ladder, preparation is key to keeping the stress and expense of moving home to a minimum.
An important element of moving is understanding the costs you are likely to face – and when these different bills will have to be settled.
The following rules apply in England but are similar in Wales, Scotland and Northern Ireland.
Estate agents’ fees
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.
Traditional high-street estate agents 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. On the sale of a £250,000 house, a 2% estate agent’s fee would lead to a charge of £5,000.
New rules mean that agents must include VAT (at 20%) on their quotes, so make sure this is the case before you sign a contract.
Newer online estate agency services can work out significantly 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. Online agents tend to charge a fixed fee, typically of between £500 and £1,000.
Vendors should bear in mind, though, that online services are likely to charge you whether your property sells or not. This is generally not the case with traditional agents – but again, this is an important point to check.
In most cases, agents’ fees are not payable until the sale is completed.
If you need to arrange a mortgage for the property you are buying, there is likely to be a range of costs associated with the new loan.
As well as the deposit that you'll already have in place, fees can vary hugely, but look at the overall cost of borrowing – taking into account fees as well as the interest rate – when deciding on the most suitable deal.
The most common fees include:
Arrangement fee: these can range from zero to £2,000, and may also be known as a product fee.
Booking fee: when you apply for a loan, you may be charged to ‘reserve’ the deal before you are in a position to complete it. This fee, of around £100 – £200, is often non-refundable in the event of your transaction falling through.
Valuation fee: lenders will usually 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, these charges are not payable until the mortgage completes and you have bought your new property. It may also be possible to add some or all fees to the mortgage balance, which means you pay them off – with interest – over time rather than facing another bill at a time when your finances are particularly stretched.
The property’s condition
It is not obligatory to have a survey carried out on the property you are buying, but it is a very good idea. A surveyor can check for any structural flaws and make sure there are no issues with the fabric of the home.
Your mortgage lender is likely to have a valuation carried out (see above) but this will not assess the condition of the property in any detail.
There are different types of survey available depending on the level of detail you want the surveyor to go into – on older properties, it could make more sense to pay for a more extensive survey.
The cheapest option is a Condition Report, at a cost of around £300 to £700 depending on the size of the property. A HomeBuyer Report usually costs between £450 and £800 and will provide a greater level of detail relating to potential legal issues, as well as concerns like subsidence or damp.
For properties where you have greater concerns, a full structural survey will provide a comprehensive warts-and-all overview at a typical cost of between £600 and £1,500.
Meanwhile, sellers must provide an Energy Performance Certificate to prospective buyers: 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 is likely to cost between £60 and £100.
Fees for surveyors will generally be due as soon as the work is completed.
Getting the legal side of buying and selling property right is crucial, and you will need to instruct a solicitor or specialist conveyancer to handle your purchase and/or sale.
Their responsibility is to deal with the contracts between the two parties in each transaction, as well as to register purchases with the Land Registry. They will also be able to offer advice, for example, relating to issues thrown up by the survey, and deal with estate agents.
Fees can vary from one professional to another: in some cases you will be asked to pay an hourly rate, but your solicitor or conveyancer should be able to give a guide at the outset of what overall costs are likely to be, provided nothing out of the ordinary happens.
As a rough idea, expect to pay around £1,000 when buying a home. Fees for selling may be less as there are not so many checks to carry out.
Your legal professional would usually bill you once the transaction has completed.
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.
Homes in England and Northern Ireland valued under £125,000 are now tax-free, while there are higher rates imposed on second properties. First-time buyers, meanwhile, are exempt from stamp duty on homes worth up to £300,000 – saving them as much as £5,000. In Scotland and Wales, it is referred to as land and buildings transactions tax and land transaction tax, respectively.
Use an online stamp-duty calculator to work out how much you will have to pay.
Stamp duty is payable when the purchase completes.
Finally, you are likely to have to pay to move your belongings into your new home. 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.