The cost of moving
In this article we aim to answer one of your most common questions. What will it actually cost to move?
Whether you are a First Time Buyer, Property Investor, moving to a more practical property or just fancy a change of scenery. We investigate the true cost of moving from Stamp Duty to solicitors, agents fees and removal costs.
STAMP DUTY
Stamp Duty is a tax payable to the government that may apply to you depending on your purchase position.
Currently, as a First Time Buyer you may benefit from First Time Buyer Stamp Duty Relief applicable on purchases upto £500,000 meaning you are exempt from paying any duty on the first £300,000 of your prchase with the amount from £300,000 being taxed at 5%.
Below is an example of Stamp Duty Payable for a First Time Buyer purchasing for £450,000:
The £7,500 is payable as 5% of the £150,000 above £300,000.
If you are buying a home for £450,000 but this is not your first purchase the stamp duty liability would look very different. The fact that you now pay tax on the whole amount is reflected in the Detailed Calculation below:
At present, if you are looking to purchase a property as an investment, you are expected to pay an additional 3% Stamp Duty on top of the liability of an applicant buying their primary residence. To explain take a look at the calculation below again based on £450,000 in order to illustrate the effect on you costs. See below:
Stamp duty applicable at £450,000 when buying an investment property.
The above calculations are accurate as of 6th May 2020 and may be amended by the government. You can calculate your stamp duty costs with the gov.uk stamp duty calculator which allows you to input your own purchase price and position just CLICK HERE. (This will be updated if any stamp duty changes are applicable).
DEPOSIT
Generally, the bigger the deposit you can pay, the more likely you are to be given a mortgage (subject to a mortgage affordability assessment), and the lower your interest rate is likely to be.
This is the amount you put towards the cost of the property when you buy your home.
On average, you need at least 5% to 20% of the purchase price (for example: £10,000 to £40,000 when buying a £200,000 home).
SOLICITORS AND LEGAL COSTS
You’ll normally need a solicitor or licensed conveyor to carry out all the legal work when buying and selling your home.
Legal fees are typically £850-£1,500 including VAT at 20%.
They will also do local searches, which will cost you £250-£300, to check whether there are any local plans or problems.
We can also recommend other local independent firms who we deal with on a daily basis that will be able to provide you with a detailed quote.
Electronic transfer fee
Typically this costs £40-£50.
It covers the lenders cost of transferring the mortgage money from the lender to the solicitor.
ESTATE AGENTS FEES
This is only paid by the seller, not the buyer, for the estate agent’s services.
It is negotiated when they put the property on the market.
It is usually 1% to 2% of the sale price plus 20% VAT.
We will discuss our fees with you at length at the valuation stage of your moving journey.
REMOVAL COSTS
These usually range from £500-£700, some removal firms do also offer a packing service for an additional fee which is attractive to some clients as you benefit from their insurance. If yoy are working to a budget, you could rent a van do it yourself
MORTGAGE FEES
These might include:
A booking fee, an arrangement fee of up to £2,000, and a mortgage valuation fee.
It’s best to pay these upfront rather than adding them to your mortgage, otherwise you’ll be paying interest on them for the life of the mortgage.
Look beyond the interest rate. Make sure you also take the fees and charges into account when choosing a mortgage.
VALUATION FEE
The mortgage lender will assess the value of the property to establish how much they are prepared to lend you.
The cost can be £150-£1,500 based on the property’s value.
Some lenders might not charge you for this, depending on the type of mortgage product you select.
The lender’s valuation is not like a full structural survey so it might not identify all the repairs or maintenance that might be needed. You may want to add a Homebuyers Report or Full Structural Survey to your valuation to asses the property's condition. This is vital so you understand if there are any problems before you buy.
Surveys range from a basic Homebuyers Survey costing from around £300 to a full structural survey from £600 or more.
Paying for a good survey could save you money on repairs in the long run.
ONGOING HOMEOWNER COSTS
Remember once you buy your own home you’re responsible for looking after it.
MAINTENANCE AND REPAIRS (always have some funds in reserve)
Can you believe, the average repair bill for new homeowners is £5,750!
Your survey should have highlighted any problems that need fixing straight away.
INSURANCE
The lender will require you to take out buildings insurance to protect your new home against damage from fire, floods, subsidence and anything else.
It’s also a good idea to have contents insurance for all your possessions, and life insurance to pay off your mortgage should you die before you’ve repaid the entire amount.
You can easily get a quick idea of insurance for your new home by searching on sites like comparethemarket.com or confused.com
COUNCIL TAX
The amount you pay is based on where the property is and its valuation band the property is in. You can check the Council Tax Band of your new home HERE.
UTILITIES
If the property you are buying is occupied we would recommend asking the sellers how much they spend on utilities – gas, electricity and water – every year.
Don’t forget to think about charges for your phone, TV packages and broadband.
LEASEHOLD AND MANAGEMENT CHARGES
If you buy a leasehold property, you’ll have to pay ground rent (typically around £50-£100 a year) and service charges to the person who owns the freehold.
Service charges and admin fees differ between properties but it is important that you understand this prior to committing to a purchase and start to incur fees.
We really hope that you have found the information within the article useful. If you do feel that you would like to discuss things further, do not hesitate in CONTACTING US.