Beyond the purchase price of a property, homebuyers are faced with a number of additional costs that can have a considerable impact on their budget. Below is a list of these additional costs and some suggestions on how to reduce them.
Solicitor costs can be £1,000 or more, usually depending on the firm and the type of property purchase involved. Unfortunately, for the vast majority of people, DIY conveyancing is not an option due to the details involved in the process. Many solicitor firms offer fixed fees, and some are even open to negotiating. However, for those buying and selling, the best savings can usually be made by using the same solicitor and paying a combined job price.
Estate agent costs
Estate agent fees range from 0.5% to 3% depending on the property price, area, and the seller’s negotiation skills. However, with estate agents – as with anything else – you tend to get what you pay for and reputable agents usually won’t drop their fees. The good news is that unlike stamp duty and solicitor fees, estate agent costs can be avoided. The internet has provided home sellers a much cheaper option with the introduction of property websites allowing sellers themselves to list their property for the public to find.
For many people the biggest expense after the property itself is stamp duty. For properties costing £60,000 to £250,000, the duty is 1%; £250,000 to £500,000 is 3%; and £500,000 onwards is 4%. Property sold for below £60,000 is exempt from stamp duty. Unfortunately, there is very little chance of achieving a reduction on stamp duty as the government has closed almost every loophole for saving on this tax. However, there is one scheme still in place whereby 2,000 locations across the UK have been designated as ‘disadvantaged areas’ and, as such, properties sold for up to £150,000 in these areas are exempt from stamp duty.
For any property requiring a mortgage, a survey will be required by the lender to reduce their risk by ensuring the property meets certain structural criteria. There are three types of report available: a valuation, which costs approximately £85 and includes very little more than a price comparison; a homebuyer’s report, which costs approximately £250 and which provides a general report on the property’s condition; and a full structural survey which can cost upwards of £500, but will provide a complete and detailed report on the property’s structural condition. The obvious way to save on this cost is to choose a cheaper survey. However, due to the nature of buying something as expensive as a home, homebuyers should consider a full survey as an investment in their new asset. Shopping around may produce some additional savings.
The cost of removals really depends on how much furniture needs to be moved and the distance between origin and destination. An average move is estimated to cost around £600 with a reputable removal firm. Savings could be made by being flexible with dates to work around the removal company’s diary. Alternatively DIY removals can be a cheaper option requiring little more than hiring a van. Furthermore, a ‘furniture audit’ may result in savings by getting rid of unwanted furniture before the move, or by delaying new furniture purchases until after moving in the new house.