The Hidden Costs of Buying a House in the UK: What You Need to Know

Essential Expenses You Might Not Have Considered When Buying Your Dream Home

What you should know Probably the most important decision that most people ever make in financial terms, there are a number of so-called hidden costs involved in buying a house. These often catch first-time buyers and even experienced homebuyers off guard in the process. Understanding these costs beforehand can help you be financially prepared for every phase of the homebuying journey.

Here is the most common breakdown of hidden costs when buying a house in the UK.

1. Stamp Duty The biggest additional costs when buying a property in the UK include the Stamp Duty Land Tax, more commonly known as SDLT. The stamp duty itself is a kind of tax that is payable to the government on the purchase of any property above the specified threshold. You pay an amount dependent upon the price of the property and where it is located.

Stamp Duty Rates: Stamp duty rates for 2024 are as follows: Tiers:

• £0 - £250,000: 0% (First-time buyers pay 0% on homes up to £425,000)
• £250,001 - £925,000: 5%
• £925,001 - £1.5 million: 10%
• Over £1.5 million: 12%

For first-time buyers, there is an exemption on homes bought up to £425,000, and then lower-rated tax on the first £625,000.

Besides that, there is the stamp duty, which most new buyers overlook, their sole focus being on the house price. This can easily set one back thousands of pounds in addition to the general cost, especially for high-value areas.

2. Legal Costs

These are solicitors or conveyancers that must be engaged when purchasing a home. These professionals will ensure a smooth and successful transition in the ownership of property, with all things legally in order.

Solicitor fees are also variable, but you might expect to pay anything between £800 and £2,000 plus VAT depending on the complexity of the transaction. You might also have to pay for additional costs including:

• Land Registry fees - the cost of registering the property with the government
• Search fees : more on those later.
• Disbursements: this is extra money that your solicitor may have to pay on your behalf to third parties, to cover the costs of things like searches or registration.

Legal fees could be another more substantial addition to the cost. Hence, it is a good thing to take it into consideration from a very early stage.

3. Survey Costs It is highly recommended that you arrange a property survey before buying a house to see probable issues in the structure or state of the home. There are many different types of surveys that can be quite varied in cost; these include:

• Homebuyer Report: This is a general survey covering the most common problems. It can cost anything from £400 to £1,500 depending on the size of the property.
• Building Survey: It is the most detailed report which often recommends that it should be applied to the older home or one which needs major renovations. May cost £600 to £2,000.
• Valuation Fee: If you're applying for a mortgage, this is the basic valuation your lender may require, and it can cost anything from £150 to £1,500 depending upon the value of the property.

While it may seem an added and unnecessary expense to have a survey, it saves you thousands of pounds further down the line if something is highlighted that you would not have noticed otherwise.

4. Mortgage Fees With any mortgage, you will most likely have to pay other fees besides just the mortgage itself. Not all lenders charge identical fees, but most charge these common types of fees:

• Arrangement Fees: The lender will charge to set up the mortgage. The cost can be anything between £500 and £2,000, depending on the lender and type of mortgage.
• Valuation Fees: As alluded to above, your lender in almost all cases will require a valuation of the property, which can be as much as £1,500 but in all likelihood will fall between £150 - £1,500.
• Mortgage broker fees: If you go via a mortgage broker who will find you the best deal, then this will probably come with a cost associated. Some charge a fixed fee between £300 and £500 or a percentage of the loan amount.

For this reason, you're always best advised having your lender or broker outline the associated fees so you can financially plan accordingly.

5. Removal Costs

In moving into a new home, you will be able to consider removal firms that will help in facilitating your needs for packing, loading, and relocation. Other determining variables when costing removals are determined by the size of your home and the distance of your move.

• The cost for hiring professional removals companies could vary in the range of £300 to £1,500 depending on the distance and the size of the property.
• Packing materials: You are also going to get another £50 to £100 for boxes, tape, and bubble wrap.

It's very easy to underestimate how much it may cost to move, but it can certainly add up quickly especially if you have a lot of things to move or are going a long distance from where you currently reside.

6. Property Maintenance and Repairs Once you have secured the property, there may be continued costs in the forms of maintenance and repairs. Even though the house may appear in great shape, there could be things that will need your immediate attention once you move in.

• Repairs: Replacing broken appliances, leaks, or damp may run into hundreds of thousands of pounds.
• Home Insurance: You will have to add on home insurance, a must for your property and belongings; it ranges from £150 to £500 yearly, depending on the value of your property.

It would be advisable to immediately make a budget for repairs and maintenance that it requires.

7. Council Tax and Utilities Then there are the ongoing bills once you move in. The most major one being the Council Tax, which is a tax of a local nature responsible for financing certain local services that include rubbish collection or street cleaning. The amount varies from one place to another and on the value of the property, but in general, it can range from £1,000 to £3,000 yearly.

Also add, on top, £150 to £300 for utilities-so gas, electricity, and water-and broadband.

8. Ongoing Costs of Refurbishing a Property Not many buyers dream about what it can really cost to refurbish or improve a property. It can be very different according to the extent of the work, whether you will just decorate, build in an extension, or improve the garden. For example:

• Kitchen remodeling: £5,000-£20,000
• Bathroom renovation: £3,000-£10,000
• Garden landscaping: £1,000-£5,000

You can work out whether to carry out extensive changes based on whether these are going to have any impact on your budget when making any major alterations.

Conclusion While the excitement over buying a house is exhilarating, the financial reality is well known. All these charges include the stamp duty, legal fees, surveys, mortgage fees, moving costs, and ongoing maintenance that might end up quite insupportable, hence make sure you budget for these expenditures in an appropriate manner. If you are conscious of exactly how much it could end up amounting to, you shall be better prepared and avoid a financial surprise or two during the process.

At Argant Estates, we understand well that preparation is the key to your property buying journey. Considering buying and in need of some professional advice or valuation? Don't hesitate to contact us today for a free consultation. Here at Argant Estates, we will make everything run as smooth as possible regarding your property purchase.