What is the Cost of Buying a House in 2021?
The average cost of buying a house in the UK is £25,569, based on buying a 3-bedroom property at the current UK average house price of £237,834. This overall cost can vary depending on the location and size of the house, what type of survey you need on the property and who your mortgage lender is.
Our article will provide you with all the information you need to take the first steps towards buying a new home. Compare My Move work with property and financial experts to review and explain all the costs associated with buying a house.
The Impact of Covid-19 on Buying a House
Following the global spread of Covid-19 and the subsequent UK lockdown, the UK is officially in recession for the first time in 11 years. As a result, the housing market has taken an unexpected hit, impacting sellers and buyers alike. According to the Land Registry, house prices will be in a constant flux for at least the next few months.
In response to the changes, many lenders are no longer offering 95% mortgages - with some even requesting a minimum 15% deposit, a move which will likely hit first-time buyers the hardest.
However, changes to Stamp Duty fees as a result of the pandemic have worked in favour of the buyer, with the threshold for paying the fee shifting from houses costing £125,000 and over, to houses priced at £500,000 and over until next April. This means if you are buying a property under £500,000, you will not be required to pay Stamp Duty in England and Northern Ireland until April 2021.
What Are the Major Upfront Costs of Buying a House?
Mortgage Deposit
The deposit is the amount you initially put towards the cost of the property. On average, a mortgage lender will require a minimum of 5% to 20% of the purchase price. Typically buyers will put down 10% of the purchase price.
Data from This is Money states there are almost ten times more mortgage products available to borrowers who have a 10% deposit as opposed to a 5% deposit. For example, a £200,000 home will require a minimum £10,000 deposit. The bigger the deposit you can afford to put down, the better your mortgage deal and lower the interest rate will be, giving you the option of paying the mortgage back quicker.
It is worth researching various lenders due to changes implemented as a result of the impact of COVID-19 pandemic and the recession which has followed. Many lenders have made changes to their mortgage products, with some no longer offering 95% or even 90% mortgages. This means a 5% or 10% deposit may not be an option for budding buyers.
Mortgage Fees
A valuation fee is paid to your lender to carry out a mortgage valuation survey which will value the property. It will reassure them that the home is worth the amount they are lending. This can sometimes be free, depending on your mortgage lender.
| Fee | What is it? | Cost |
|---|---|---|
Arrangement Fee | An arrangement fee is paid to your lender for setting up the mortgage. You can choose to add it to your mortgage payments or pay upfront. This can vary based on your lender and the type of mortgage you have. | £0 - £2,000 |
Booking Fee | A booking fee is charged when you apply for a mortgage. It’s often non-refundable, even if you don’t end up going ahead with the mortgage. Some mortgage providers may include it as part of the arrangement fee | £99 - £250 |
Valuation Fee | A valuation fee is paid to your lender to carry out a mortgage valuation survey which will value the property. It will reassure them that the home is worth the amount they are lending. This can sometimes be free, depending on your mortgage lender. | £150-£1,500 depending on the price of the property |
Telephonic Transfer Fee | A telegraphic transfer fee is what your mortgage lender will charge you for sending the money to your solicitor. | £25-£50 |
Mortgage Broker
Although this is not required to buy a home, some buyers opt for using a mortgage broker to advise them on which lender to take out a mortgage with. On average the cost of a mortgage broker is around £500-600 (fixed fee), with any additional costs added after completion.
Surveying
A house survey will give you a better idea of the property you’re buying and, if necessary, any maintenance and/or repairs it requires. Below is a breakdown of the various surveys and costs, stating which survey is best for the type of house you are looking to purchase.
| Survey Type | Cost |
|---|---|
Home Condition Survey | From £250 |
Homebuyer Report | From £350 |
Building Survey | From £500 |
Snagging Survey | £300-£600 |
1. Home Condition Survey
The most basic report, the RICS Home Condition Survey is the cheapest of the surveys available from around £250. It will outline the condition of the property and draw attention to any urgent defects or potential legal issues. This is best suited for a new build or a newer “conventional” home in good condition.
2. Homebuyers Survey
The RICS HomeBuyers Report is the most common type of property survey available. This will highlight any major issues with the property you are looking to buy.
A RICS Homebuyers survey will give you a good understanding of the condition of the property and any work which will be required once the sale is completed. Specifically, the survey will look for any rot, dampness and condensation and the condition of ceilings, walls, floors, chimney breasts (if applicable) and joinery.
The price of a Homebuyers survey starts from around £350 for properties worth up to £99,000, with the typical cost being around £500 for a house priced between £100,000 and £249,000. Prices will depend on the size of the home and the location.
3. Building Survey
This is the most comprehensive survey, suitable for all residential properties but advised for older or unusually constructed houses or properties in need of major repair. This survey will detail any faults and work required.
Although at the more expensive end of the surveys available, a full structural survey could save you money by highlighting any issues before they develop, in addition to giving you the information you need for re-negotiating the sale of the property if any major work is highlighted.
The cost of a Building Survey typically starts at £500 or £600, with the cost depending on the size and value of the home.
4. New-Build Snagging Survey
Snagging surveys usually cost between £300 - £600 depending on the size of the new-build.
This is an independent inspection to look for any issues with a new-build property. The best time to have this done is between the building work being finished and your legal completion date.
Professional surveyors will usually report any findings to the developer, this way any issues can be addressed in a timely manner.
It is possible to do the snagging survey yourself, which would only cost your time, however you run the risk of missing something which could cost you much more in the future. Almost every new home will also have a warranty for buyers, which should cover most snags not discovered prior to moving in.
There are three main providers of new home warranties – the National House-Building Council (NHBC) which covers over 80% of all new homes; Local Authority Building Control Warranty (LABC) and Premier Guarantee.
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Conveyancing Fees
Hiring a conveyancer is a crucial part of the house buying process. Conveyancing fees are the legal fees for buying a house and are on average £1,040 inc. VAT at 20%.
The solicitor’s fees for buying a house will depend on the size, location and value of the house, in addition to the number of searches needed during the conveyancing process. In addition to the legal fee paid to the conveyancer, the overall cost will include conveyancing disbursements that your conveyancer will pay on your behalf. Conveyancing Disbursements are the fees and taxes that your solicitor has to pay to other organisations or third-parties as part of the house-buying process, including an environmental search and a local authority search.
Below we’ve given an idea of what the average cost of conveyancing may be in relation to the cost of the property. There is no onset price for conveyancing fees and various factors, including the conveyancer you choose, can influence the cost.
| Property Value | Average Freehold Cost* | Average Leasehold Cost* |
|---|---|---|
Up to £100,000 | £860 | £1,030 |
£100,001 to £200,000 | £930 | £1,110 |
£200,001 to £300,000 | £1,040 | £1,230 |
£300,001 to £400,000 | £1,120 | £1,310 |
£400,001 to £500,000 | £1,200 | £1,390 |
£500,001 to £600,000 | £1,410 | £1,560 |
£600,001 to £700,000 | £1,440 | £1,630 |
£700,001 to £800,000 | £1,670 | £1,850 |
£800,001 to £900,000 | £1,810 | £2,010 |
£900,001 to £1,000,000 | £1,900 | £2,100 |
*This is just an indication of costs with an average found from a sample of fees from 50 licensed conveyancers across the UK. Fees will greatly vary depending on your circumstances and conveyancer.
Stamp Duty
Changes in Stamp Duty Land Tax since the Coronavirus have meant that in England and Northern Ireland, Stamp Duty fees will not apply to any property purchase under £500,000, until April 2021. Prior to this, Stamp Duty Land Tax was paid when purchasing a home worth more than £125,000 in England and Northern Ireland.
First Time Buyers did not have to pay tax on any property costing up to £300,000. If their home cost more, they would pay 5% stamp duty on the portion of the cost above £300,000 and up to £500,000. However, as of April 2021, First Time Buyers will now be exempt from paying Stamp Duty fees in England and Northern Ireland on properties costing up to £500,000.
In Wales, Stamp Duty Land Tax was replaced by the Land Transaction Tax and the Buildings Transaction Tax (LBTT) in Scotland, which is not applicable to properties under £145,000. Both LLT and LBTT are applied up to a maximum of 12%.
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Surveying Fees
A house survey will give you a better idea of the property you’re buying and, if necessary, any maintenance and/or repairs it requires. Below is a breakdown of the various surveys available and which survey is best for the type of house you are looking to purchase.
1. Home Condition Survey - from £380
The most basic report, the RICS Home Condition Survey is the cheapest of the surveys available at around £380. It will outline the condition of the property and draw attention to any urgent defects or potential legal issues. This is best suited for a new build or a newer “conventional” home in good condition.
2. HomeBuyers Report - from £350
The RICS HomeBuyers Report is the most common type of property survey available. This will highlight any major issues with the property you are looking to buy.
A RICS Homebuyers survey will give you a good understanding of the condition of the property and any work which will be required once the sale is completed. Specifically, the survey will look for any rot, dampness and condensation and wormwood and the condition of ceilings, walls, floors, chimney breasts (if applicable) and joinery.
Externally the survey will review the roof, chimneys, gutters, main walls, windows and doors, boundaries and drainage. This will also include any garages or conservatories if present.
The price of a Homebuyers survey starts from around £350 for properties worth up to £99,000, with the typical cost around £500 for a house priced between £100,000 and £249,000. Prices will depend on the size of the home and the location.
3. Full Structural or Building Survey - from £600
This is the most comprehensive survey, suitable for all residential properties but advised for older or unusually constructed houses or properties in need of major repair. This survey will detail any faults and work required.
Although at the more expensive end of the surveys available, a full structural survey could save you money by highlighting any issues before they develop, in addition to giving you the information you need for re-negotiating the sale of the property if any major work is highlighted.
The cost of a Building Survey typically starts at £600, with the cost depending on the size and value of the home.
4. New-Build Snagging Survey - from £300
Snagging surveys usually cost between £300 - £600 depending on the size of the new-build.
This is an independent inspection to look for any issues with a new-build property. The best time to have this done is between the building work being finished and your legal completion date.
Professional surveyors will usually report any findings to the developer, this way any issues can be addressed in a timely manner.
It is possible to do the snagging survey yourself, which would only cost your time, however you run the risk of missing something which could cost you much more in the future.
Almost every new home will also have a warranty for buyers, which should cover most snags not discovered prior to moving in.
There are three main providers of new home warranties – the National House-Building Council (NHBC) which covers over 80% of all new home; Local Authority Building Control Warranty (LABC) and Premier Guarantee.
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On-Going Costs to Consider
Although buying a house comes with a number of upfront costs you will need to prepare for, you will also need to be prepared in the long term for the on-going costs of owning a property. Below we’ve listed the key costs to consider when it comes to homeownership.
Insurance
According to the AA British Insurance Premium Index, the average combined home and contents insurance policy cost £161.75 - working out at just £3.11 a week.
Your mortgage lender will most likely require you to purchase buildings and contents insurance, starting from the day of completion. This MUST cover both the exterior building and any extensions and sheds/outhouses, and the contents within the house.
Buildings Insurance
Buildings Insurance will cover any permanent fixtures and fittings such as bathrooms and kitchens, in addition to the walls, floors and roof of your home. Ensure this also covers accidental damage.
Contents Insurance
Contents Insurance will cover the belongings in your home such as televisions, tech, furniture and carpets. Building and contents insurance costs can be spread out over the year and paid monthly, with costs varying depending on the size of the property and the value of both the property and your possessions.
Your mortgage provider can offer you insurance, although many people opt to look around. Comparison sites prove to be popular, with around eight out of ten people using these to search the market for the cheapest quote, according to Money Advice Service.
Property Maintenance
After the initial cost of purchasing the property, the cost of owning a house comes into play. In addition to any new furniture and decor costs, it’s worth saving for any potential work that will be required - either upon moving in or further down the line.
There is a belief that 1% of the purchase price of the home should be set aside for ongoing maintenance. For example, if your home costs £200,000, it is recommended that you budget £2,000 a year for maintenance.
According to a report from Lloyds Banking Group, the average UK homeowner will spend £3,579 every year on the interior of their home. The report also found that 65% of homeowners spend money on their home to improve how it looks, in contrast to 23% who said they spend money to increase its value and 12% who do so to make more space.
Your survey, should you choose to go ahead with one, will highlight potential issues and work that will be required, so that you can be prepared for the costs before you complete the purchase.
Utility Bills
After the costs of buying your home, the cost of running a household will need to be factored in. From council tax and utilities to broadband and TV licensing, running a home comes with a number of costs that prospective homebuyers need to be aware of.
1. Council Tax
Your Council Tax bill will depend on which band it’s in and how much money the local authority needs to raise. If you live alone in England, Scotland and Wales you may be entitled to a 25% discount.
2. Gas and Electric
The price of gas and electricity will depend on your provider but OVOenergy found that in 2019, the average combined gas and electric bill for UK households was £1,289 a year.
Many gas and electricity firms offer households smart meters, which show the direct usage of the energy and its cost; these are expected to be mandatory from 2024 but, until then, are optional. Note that some older homes may not be able to have smart meters fitted.
3. Water rates
The cost of a typical water bill on average is £415 a year, or £34.58 a month. This will of course depend on where in the country you live and who your water provider is.
4. Broadband
A recent Cable.com study found that Brits spent £30.30 each month on average on their broadband bills. This will vary between providers.
5. TV License
If you plan on watching television in your new home, the cost for a TV license for the year is £157.50. The cost is £53 if you’re watching on a black and white TV set and it is free for those over 75. If you do not pay for a TV license you could face fines of up to £1,000.
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Other Costs to Consider
Whilst you're planning your budget, don't forget to factor in the cost of removal services (with or without professional packing, storage (should you require it) and mail redirection.
House Removal Costs
The estimated cost of moving house based on a 3-bed house, with the removal company travelling 50 miles is £806. It is worth noting that this figure is based on the average 3-bedroom property in the UK and that the price depends on the company you choose, your location and length of the journey.
Other factors to keep in mind with regards to cost includes whether you require a professional packing service and the dismantling and reassembling of furniture. Depending on the size of the house, the distance required to travel and the volume of your belongings, the cost of moving companies will range between £264 and £1,680.
Remember you can save up to 70% on your removals costs by comparing companies via Compare My Move.
Mail Redirection
You will need to arrange to have any post redirected and sent to your new address. This costs between £1.99 and £62.99 depending on the length of time you require.
Mail redirection is based on the resident’s surname and applies to as many people with the same surname living in the property. If you are moving with someone who has a different surname, they will also have to pay for redirection.
Storage
During the house buying process, you may need to consider using a storage facility. This could be for furniture acquired prior to the purchase of your home, or if you find yourself between house moves.
According to the Self Storage Association (SSA) UK Annual Industry Report, the average rental cost of self-storage is £23.11 per square foot per year. As a rough guide, Safe Store suggests that a 75 square foot unit would accommodate the contents of a small 1-2 bedroom flat, including a living room suite, dining room table and chairs, kitchen white goods, beds, wardrobes and chest of drawers and several boxes of soft furnishings, clothes and books.
Larger homes, or homes with more possessions, will, of course, require a larger amount of space. Many storage companies have offers available so it’s worth looking around and comparing prices beforehand.
Next Steps of Buying a House
This article is part of our home buying guide. In our series of articles, we explain everything you need to know about the buying process.
In the next article, we breakdown the true timings of buying a house, from mortgage applications to completion day. To find out more, read how long does it take to buy a house.
