If you’re moving house you’re probably not expecting it to be cheap. Unfortunately, the colossal commitment of a mortgage is only one in a long list of expenses you’ll have to face in order to move up (or even down) the property ladder. Extra costs can easily run into five figures and it’s vital you budget for the following when planning a move.
Stamp Duty
SDLT (stamp duty land tax) rates could add a hefty sum on to your costs depending on the value on the property you’re moving into. You’ll be charged the percentage shown below depending which bracket your home falls into.
- 125,000 or less: 0%
- Over 125,000 – 250,000: 1%
- Over 250,000 – 500,000: 3%
- Over 500,000 – 1 Million: 4%
- Over 1 Million – 2 Million: 5%
- Over 2 Million 7%
The one exception to these rules is if the property is in an area designated by the government as being disadvantaged. In this case you only have to start paying 1% at the higher threshold of 150,000.
There used to relief for land tax on properties in such areas but as of the 6th of April 2013 this has been scrapped. However, if you made a transaction effective before this date you have until the 5th of May 2014 to make a claim for relief.
You should bear in mind just below a threshold you may be investigated by HMRC to ensure you’re not misrepresenting the price you are paying.
Estate Agent’s Fees
If, as part of your move, you’re selling your current house, you will end up paying the estate agent a percentage of the price it goes for, so again, the more the property costs, the higher this fee will be. This is negotiable but typically ends up between 1%-3% (a recent survey found 1.8% to be the national average).
You should be prepared to try and barter the rate down, especially if you’re buying a more expensive property. If it’s above £500,000 you might be able to get them to drop below 1%.
Some agents will charge a fixed fee. This is especially common for cheaper properties. Be sure to check that this doesn’t work out to an extortionate percentage.
Always check that this fee covers everything you expect from the agent, or you could face extra hidden costs. Finally, be aware that the fee doesn’t include VAT.
You can avoid such fees by trying to sell your house yourself but you’ll have to stump up for advertising costs and arrange viewings yourself. Though it entails a lot of work, it’s entirely possible to do. You can find some good advice on selling your home yourself here.
Land Registration Fee
You’ll have to pay a fee in order to register yourself as the owner of your new property. This will be relatively small for a modestly property that has already been registered in the past, but if it’s the first time the property has been registered it’ll considerably dearer, especially if it’s an expensive dwelling.
Depending on these circumstances you could expect to pay between £40 to £900. You can find out more from this break down of registry service fees.
Search Fees
You’ll have to pay various fees to check the deeds of the property, find out about any issues that might affect you as the owner and uncover any legal liabilities you might be taking on. Altogether these will cost another £200 or so. The conveyancer should take care of this for you…
Indemnity Insurance
You many be advised to purchase building indemnity insurance to protect you from any costs you might incur as the owner of the dwelling. For example, if the previous owners had built an extension which contravened building regulations the council could potentially order to you to rectify the situation out of your own pocket. Indemnity insurance is designed to cover such risks.
Conveyancing/ Solicitors Fees
Of course, you’ll have to pay for these services to, somewhere in the region of £600- £1,000. If you’re also selling, you may be able to save money on legal costs by getting a package detail for both your sale and purchase.
Surveys
You can choose how detailed a survey you want to carry out. A basic homebuyer’s report will cost upward of £300 whereas comprehensive structural survey will cost at least £500. Of course, depending on what the surveys find, you may be able to save much more than this by leveraging down the asking price.
Extra Mortgage Fees
If you already have a mortgage you could be hit with exit fees of around £300, if you don’t you’ll be looking at paying as much as £1,000 in arrangement fees, as well £200 or so for a valuation survey. If you use a broker to obtain your mortgage you’ll also have to pay a brokerage fee.
Depending on the type of mortgage you obtain you might be able to bring down your moving costs by selecting an option that comes with free valuation and conveyancing.
Removal
Depending on when you move, how much you need to transport, the distances involved and the accessibility of the two properties you might end paying £500 to £2,000 for removal services.
The best way to avoid paying over the odds is to shop around. Make sure you get at least three quotes and make sure to factor in insurance for your belongings. Always go with a company approved by the British Association of Removers. Obviously, getting rid of anything you don’t need to take with you before hand will save you money (indeed, you might be able to raise some of your moving costs by selling it off). You can also bring down the cost of moving by avoiding peak times such as Fridays and the end of the month.
If it’s a possibility, you will be able to save a considerable amount of money by organising a DIY removal. Of course, you’ll have to hire a van, pay for petrol and deal with the stress of getting the job done. In addition you possessions will probably not be covered by your standard contents insurance if you opt to move them yourself.
Mail Redirection
There’s a good chance you’ll forget to inform somebody of your change of address. As well as being inconvenient, missing your mail you leave you open to the risk of identity theft. Setting up a mail redirection service to ensure all your post reaches you will cost around £40.
Gas And Electricity Reconnection
You can normally expect to take over the current supply for free by simply informing the provider that you’re moving in, however if a reconnection is necessary you may be expected to foot the bill.
Ongoing Costs
As well as all the money you’ll need to pay to actually get there in the first place, living in your new home may be more expensive. Buildings and contents insurance may be higher, and even your car insurance premiums could go up.
It’s a good idea to contact your providers ahead of the mood and find out how you’ll be affected. Researching crime rates in the area can help give you an idea of which way your premiums are likely to go.
Likewise if you move into a new council tax band you could be hit with higher bills. This could be even be the case if you downsize into a smaller home, as council tax often bear little relation to the current price of the house it applies to.
You may also find your new home is more expensive to heat, light and generally maintain. To avoid this coming as a surprise you should ask about the incumbents about utility costs at the viewing stage.
