What is the total cost of buying a house (deposit, fees, taxes, etc.)?
By Homey
•
28 Jul 2022
Understand the full range of costs involved in buying a house in the UK. Beyond the purchase price, consider deposits (5-20% of property value), Stamp Duty Land Tax (SDLT), legal and conveyancing fees, survey and valuation fees, mortgage fees, and moving costs. Additional expenses include home insurance, utility setup, repairs, and maintenance. Planning for these costs ensures a smoother home-buying process and secure financial future.
Buying a house in the UK involves more than just the purchase price of the property. Prospective buyers need to account for a variety of additional costs, including deposits, fees, taxes, and other expenses. Understanding these costs is crucial for budgeting and ensuring a smooth home-buying process. Here’s a detailed breakdown of the total cost of buying a house in the UK and the considerations around these expenses.
Deposit
The deposit is one of the largest upfront costs when buying a house. It typically ranges from 5% to 20% of the property’s purchase price.
First-Time Buyers: Government schemes such as Help to Buy can assist first-time buyers with smaller deposits, but a higher deposit generally results in better mortgage rates and terms.
Example: For a £250,000 property, a 10% deposit would be £25,000.
Stamp Duty Land Tax (SDLT)
Stamp Duty Land Tax is a significant expense for homebuyers. The amount depends on the property’s price and whether you are a first-time buyer or purchasing an additional property.
First-Time Buyers: Exempt from SDLT on properties up to £425,000.
Property Value: Different rates apply depending on the property’s value, with the first £250,000 generally exempt and higher rates applied to more expensive properties.
Example: For a property worth £300,000, the SDLT might be calculated as follows:
0% on the first £250,000 = £0
5% on the remaining £50,000 = £2,500
Total SDLT = £2,500
Legal and Conveyancing Fees
These fees cover the legal work involved in transferring ownership of the property.
Conveyancer or Solicitor: Costs typically range from £500 to £1,500.
Search Fees: Include local authority searches, environmental searches, and water and drainage searches, costing between £250 and £400.
Survey and Valuation Fees
Mortgage Valuation: Required by the lender, costing around £150 to £1,500 depending on the property’s value.
Homebuyer’s Report: More detailed than a basic valuation, costing between £400 and £1,000.
Full Structural Survey: Recommended for older or unusual properties, costing from £600 to over £1,500.
Mortgage Fees
Several fees are associated with obtaining a mortgage.
Arrangement Fee: Typically between £0 and £2,000. Some lenders allow this to be added to the mortgage.
Booking Fee: Charged upfront to secure a fixed-rate deal, usually around £100 to £250.
Broker Fees: If you use a mortgage broker, they may charge a fee of £300 to £500.
Moving Costs
Moving costs can vary significantly depending on the distance and the volume of belongings.
Removal Services: Hiring a professional removal company can cost from £300 to over £1,500.
Packing Services: Additional costs if you need packing assistance, usually around £200 to £600.
Other Costs
Additional costs to consider include:
Home Insurance: Building insurance is mandatory for obtaining a mortgage, while contents insurance is recommended. Costs vary but average around £200 to £500 annually.
Utilities and Council Tax: Set up costs for utilities (gas, electricity, water) and council tax payments should be factored in.
Repairs and Maintenance: Budget for immediate repairs or renovations, as well as ongoing maintenance costs.
Future Financial Considerations
Interest Rates: Consider potential changes in interest rates, especially if you choose a variable-rate mortgage.
Service Charges: For leasehold properties, there may be ongoing service charges and ground rent.
Furniture and Appliances: New furniture and appliances can add to the initial costs of moving into a new home.
Conclusion
The total cost of buying a house in the UK extends beyond the property’s purchase price. By accounting for the deposit, stamp duty, legal fees, survey costs, mortgage fees, moving expenses, and other miscellaneous costs, buyers can better prepare their budget and avoid unexpected financial stress. Understanding these costs and planning accordingly ensures a smoother transition into homeownership and a more secure financial future.
