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 a 3-bedroom property at £237,834, the current UK average house price.
The cost of buying a house in the UK can vary depending on the location, size of the house and what type of survey you need. Other factors include your conveyancer, whether you need to pay Stamp Duty and the removal costs.
Compare My Move work with property and financial experts to provide you with everything you need to know about the costs of buying a home, which we have broken down in this article.
The Impact of Covid-19 on the Cost of Buying a House
In light of the spread of Covid-19 and the subsequent lockdowns, there has been an element of uncertainty surrounding buying and selling houses. Initially, many lenders were no longer offering 95% mortgages - with some even requesting a minimum 15% deposit, a move which hit first-time buyers the hardest.
However, it was announced in the Budget on March 3rd that the government would offer a guarantee for lenders to encourage them to offer 95% mortgages. Lenders such as Lloyds, Natwest, Santander, Barclays and HSBC are signed with, with the scheme due to run from April 2021 until the end of 2022.
Furthermore, the Stamp Duty Holiday, granted as a result of the impact of the pandemic has been extended until June 30th 2021, having initially been due to end at the end of March. This applies to properties costing £500,000 or below in England and Northern Ireland. After June, this will be reduced to £250,000 until 30 September when it returns to the normal threshold of £125,000 as of October 1st.
Wales also sees it's Land Transaction Tax (LTT) holiday extended until the end of June, with the value up to £250,000. In Scotland, the Land and Building Transaction Tax (LBTT) holiday will come to an end on March 31st as planned.
What Are the Basic Costs of Buying a House?
Below are the basic upfront costs of buying a house including mortgage costs, surveying and conveycing. These will vary depending on the location, size and value of the house and the type of survey you require.
| Service | Cost |
|---|---|
Mortgage Deposit | Usually 10% of the house price |
Mortgage Fees | From £274 |
Mortgage Broker | Average £500-£600 |
Surveying | From £250 |
Conveyancing | From £860 |
* These figures are based on current UK averages and may vary
Additional Costs
These are additional costs to consider when buying a house, based on UK averages.
| Service | Cost |
|---|---|
Removal Costs | £264 - £1,680 |
Mail Redirection | £1.99 - £62.99 |
Storage | £23.11 per square foot per year (UK average) |
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Basic Upfront Costs Explained
The cost of buying a house is made of a number of fees and expenses, from the initial deposit to the cost of a removal company. However, there are a few substantial costs which play a big part in the early stages of the house buying process.
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. The bigger the deposit you can afford to put down, the better your mortgage deal and lower the interest rate will be.
For more information on mortgages read: What is a Mortgage?
Mortgage Fees
When applying for a mortgage, you will need to save for more than just the mortgage deposit. Getting a mortgage will come with fees, with the amount varying from lender to lender. Below is a table of the mortgage fees you may need to pay for.
| 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.
To find out more read: Do You Need a Mortgage Broker?
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.
To find out more about a Home Condition Survey see: What is a Condition Report?
2. Homebuyer Survey
The RICS HomeBuyer Report 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.
This survey will highlight any major issues and give you a good understanding of the condition of the property. The survey will look for any rot, dampness and condensation and review the condition of ceilings, walls, floors and joinery.
To read more about Homebuyer Surveys visit: What is a Homebuyer Survey?
3. Building Survey
The cost of a Building Survey typically starts at £500 - £600. This is the most comprehensive survey, suitable for all residential properties but recommended for older or unusually constructed houses or properties in poor condition.
This survey will detail any faults and work required on the home and could potentially save you money by highlighting any issues before they develop. It can also provide you with the necessary evidence to negotiate the price of the property if any major work is highlighted.
For more information about Building Surveys go to: What is a Building Survey?
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. Professional surveyors will usually report any findings to the developer, this way any issues can be addressed in a timely manner.
For more on Snagging see: How Snagging Lists Can Help New Property Owners
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Conveyancing Fees
Conveyancing fees are the legal fees for buying a house and are on average £1,040 inc. VAT at 20%. These fees will depend on the size, location, value of the house and the conveyancer you choose.
Below we’ve given an idea of what the average cost of conveyancing may be in relation to the cost of the property.
| 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 an indication of cost from a sample of average fees from 50 licensed conveyancers across the UK.
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 local authority search.
To find out more about the conveyancing process visit: What is Conveyancing? The Conveyancing Process Explained
Stamp Duty
Stamp Duty Land Tax is paid when purchasing a home worth more than £125,000 in England and Northern Ireland. First Time Buyers do 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.
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%.
Currently, in England and Northern Ireland, Stamp Duty fees will not apply to any property purchase under £500,000 until June 30th 2021. This is in response to the effects of the Coronavirus Pandemic. In Wales, the Land Transaction Tax holiday will also be extended until the end of June. However, in Scotland, the LBTT holiday ends March 31st 2021.
For more information on Stamp Duty visit: What is Stamp Duty?
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Other House Buying Costs
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.
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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 require you to purchase buildings insurance, starting from the day of completion. This must cover both the exterior building, any extensions, sheds or outhouses. It is advisable to also purchase contents insurance to protect the items within the home.
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 tech, furniture and flooring. 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.
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.
Your survey will highlight potential issues and work that will be required so that you can be prepared for the costs before you complete the purchase.
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 found that 65% of homeowners spend money on their home to improve how it looks, with 23% doing so to increase its value and 12% wanting to make more space.
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 license, running a home comes with a number of costs that prospective homebuyers need to be aware of. These should mainly be covered when asking questions before buying the house.
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
The cost for a TV license for the year is £157.50 but is free for those over 75. You could face fines of up to £1,000 if you do not pay your TV License fee.
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.
