Buying a home? The hidden costs you may not know about

Updated: October 22, 2018

Buying a home is not just about getting a deposit together, there are many other costs to consider. If you’re a first-time buyer, here's what you must know?

first time buyer house

Costs incurred as part of the buying process

There are numerous costs you should be factoring in to your budget before you begin the buying process. These include:

  • Mortgage valuation, booking and arrangement fees
  • Legal (conveyancing) fees
  • Stamp duty (first-time buyers are exempt on properties priced up to £300,000)
  • Surveyor’s fees
  • Removal costs

Below is a breakdown of what these fees are for, and how much you can expect to pay.

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Conveyancing fees

Conveyancing fees are the fees you pay your conveyancing solicitor for handling the legal side of the buying process.

Conveyancing fees range from £400 to £1,500 – depending on the value of the property and the complexity of the transaction.

Hidden conveyancing fees

Although, strictly speaking, these ‘additional’ legal fees are part of the conveyancing service, they are worthy of distinct mention.  Conveyancing is a high-volume low-cost legal service.

Many conveyancing solicitors include a plethora of additional fees in their terms and conditions that can leave home buyers with a bill far higher than their initial quote.

Examples of hidden fees are:

  • Expedited completion Fee  - £50 to £150
  • Fee for obtaining additional planning documents - £20 – 50 per document
  • Statutory declaration fee - £50 – 100
  • Gifted deposit – £50 - to £500
  • SDLT Fee - £50 – 150
  • Acting for Lender Fee - £100 - £250
  • Help to Buy Fee - £200 - £400

And there are many more.  Some firms have upwards of 30 potential additional fees they can levy if certain conditions exist.

Make sure you check the small print before instructing a solicitor.

Disbursements

In addition to conveyancing fees, you will also be expected to pay conveyancing disbursements.

Disbursements are third party costs incurred by your solicitor on behalf of the buyer.  These costs are not supposed to be marked-up by the solicitor – such practice being outlawed by both the CLC and the SRA.

Conveyancing disbursements include:

Land Registry Fees – paid to HM Land Registry to register your ownership.  (note that the costs are doubled if your solicitor still uses paper filing – contact the solicitor an make sure they use electronic filing)

£20 - £455

Property Fraud fee – confirms the seller’s solicitors bank details are legitimate

£12

Property searches – enquiries made of various authorities including the local authority and water company.  Usually sold as a bundle.

£195 - £345

TT Fee – the cost of the electronic transfer of funds to the seller

£20 - £50

Office copies – Cost of obtaining official title documents from the land registry

£6 - £24

Bankruptcy/pre-completion searches

£20 - £40

Landlord notice fee – when buying a leasehold property the landlord will normal charge a fee for registering the new owner.

£50 - £200

Ground rent/Service charges – Service chares and ground rent are paid annually in advance.  If you are buying a leasehold you will need to pay-pro for the remaining part of then year o a pro-rata basis.

£0 to £1,000s

Stamp Duty Lad Tax (SDLT) – Stamp Duty will be paid to HMRC on your behalf by the conveyancing solicitor on completion.

See stamp duty section

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Stamp duty

In England and Northern Ireland, you have to pay Stamp Duty Land Tax to the Treasury when you buy a house or land over a certain price (taxes differ in Scotland and Wales).

If you are buying for the first time, you could pay little or no stamp duty depending on the price of the property:

  • You don’t pay any tax on properties worth up to £300,000
  • You pay 5% on the portion from £300,001 to £500,000
  • For homes over £500,000, the same rules apply as for people who’ve bought a home before.

Standard stamp duty rates for non-first time buyers buying a home t live in are:

Band

Rate %

up to £125K

0

£125K+ to £250K

0.02

£250K+ to £925K

0.05

£925K+ to £1.5M

0.1

£1.5M+

0.12

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Mortgage valuation fees

Not to be confused with a Homebuyers Survey or building survey, if you are obtaining a mortgage you will also have to pay for a mortgage valuation survey.

This survey is to ensure that the property is worth what you are intending to pay for it and as such offers sufficient collateral for the loan.  It is carried out for the mortgage lender’s benefit, not yours, but does offer some comfort that you are paying then right price for the property.

Valuation surveys are undertaken once your offer on the house has been accepted, and assess the true value of the property before the lender agrees to your mortgage.

Mortgage valuation surveys cost between £200 and £600.
Mortgage booking and arrangement fees

Booking fee - A payment made in advance of your mortgage application going through. It can also be called a reservation fee. It is usually between £99 and £250, and is not refunded if you choose not to go ahead with the mortgage. 

Arrangement fee - The amount you pay the mortgage lender for setting up the mortgage. It can be a flat fee or a percentage of the loan, and you can sometimes add the amount on to your mortgage (you will then pay interest on it). It can cost up to £2,000. 

Mortgage broker fee - Mortgage brokers don’t work for free.  They either charge a fee or or take a commission from then lender.  In the case of the latter, it will be built into the mortgage interest rsate and you will be paying for it for then term of the mortgage.

Surveyor’s fees

Once you have had an offer accepted but before you exchange contracts, you would be well advised to instruct a surveyor to carry out a survey on the property to check for damage and repairs that could incur unforeseen costs. 

How much this process costs will depend on which survey is carried out for you. There are two main options:

  • A HomeBuyer’s Report. This will give you an overview of the condition of the property, and is generally considered sufficient for homes built in the last 100 years and of standard (brick and tile) construction. It will cost between £350 and £1,000.
  • A building survey. This is a more detailed, comprehensive survey and can be prudent for older buildings. It will cost between £500 and £1,300.
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Removal costs/packing services

The cost of a removals service depends on how much ‘stuff’ you need to move and how far you need to move it.  Within the UK costs typically range from £500 - £3,000.

Packing services will add £300 - £1,000.

If you can call in a few favours from friends and do it yourself,  a van could cost you between £100 and £200 for a weekend.

You will probably want to take out moving insurance also which can add £50 - £500.

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And once you have bought the house…

Be sure you are financially ready for:

  • Ongoing repairs and maintenance 
  • Utility bills
  • Council tax
  • Home and contents insurance (buildings insurance will be a requirement if you have a mortgage).
  • Residents parking
  • Mail redirection
  • Cost of any breakages
  • New furniture
  • Kennels for any pets
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… and of course the dreaded

VAT

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Be prepared

Buying your first home is an exciting process.  Being prepared for the costs you will incur will help you budget accordingly and help you manage what is an expensive and stressful process.

Gaynor Haliday, Legal researcher

About the author

Gaynor Haliday is an experienced legal researcher and published author. She has had numerous articles published in the press and is a legal industry commentator.

Read more about this Quittance Legal Expert

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