What is the Cost of Buying a House?
Wondering how much it costs to buy a house? Currently the average cost of buying in the UK is £30,218. This is based on buying a 3-bedroom property at a price of £234,370.
Buying a house comes with many upfront and on on-going costs, from the deposit, conveyancing fees, property surveys and removal fees there will be plenty for you to budget for.
In this guide, Compare My Move will review all the costs associated with buying a house, ensuring you’re prepared to take the first steps towards buying a new home.
Upfront Costs to Consider
Before you get over-excited with planning paint colours and furniture, you should ensure that you know what the upfront costs of buying a house are, as they should be your immediate concern.
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 show that 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.
In addition to the deposit, there are a number of fees that come with the mortgage itself. These can be added to the overall repayments or paid upfront, depending on the type of mortgage, the lender and your own financial situation.
Typical mortgage fees include:
1. Arrangement Fee - £1,000-£2,000
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.
2. Booking Fee - £100-£250
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.
3. Valuation Fee - £300-£400
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.
4. Telegraphic Transfer Fee - £25-£50
A telegraphic transfer fee is what your mortgage lender will charge you for sending the money to your solicitor.
5. Mortgage Broker - £500-£600 (fixed fee)
Some home buyers opt for using a to advise them on which mortgage 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.
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 and value of the house, in addition to the number of searches needed during the conveyancing process.
It is therefore worth noting that there is no one price for these fees as it depends on a variety of factors, including the location of the property, how much it’s worth and the conveyancer you are using.
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 Disbursement Fees
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. The average cost of disbursement fees in the UK is £2,588.
A breakdown of the different fees can be found below.
1. Stamp Duty Land Tax at 0-12% - £2,115
Stamp Duty Land Tax is a fee paid when purchasing a home worth more than £125,000 in England and Northern Ireland. It was replaced by the Land Transaction Tax in Wales and Buildings Transaction Tax (LBTT) in Scotland.
2. Property Searches - £250-£450
Property Searches include water and drainage search, an environmental search and a local authority search.
3. Bankruptcy Search - £2-4
This checks you haven’t been bankrupt within the last 5 years to reassure your mortgage lender.
4. Land Registry Searches - £30
This is to check the seller is the legal owner of the property in question.
Stamp Duty Land Tax is a fee paid when the property being purchased in Northern Ireland and England is worth more than £125,000.
In Wales, this has been replaced by the Land Transaction Tax (LTT) and The Land and 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%.
First Time Buyers pay no stamp duty on homes costing up to £300,000. If their home costs more, they pay 5% stamp duty on the portion of the cost above £300,000 and up to £500,000. If the first time buyer’s home costs over £500,000 then the stamp duty payable follows the same rules as for other buyers.
A breakdown of the different fees can be found below.
|Property Price||Stamp Duty Rate||Amount Payable|
Up to £125,000
£125,000 - £250,000
£0 - £2,500
£250,000 - £925,000
£2,500 - £36,250
£925,000 - £1,500,000
£36,250 - £93,750
This data has been taken from the Compare My Move Stamp Duty article, where our finance experts take you through the varying rates.
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.
On-Going Costs to Consider
Now that you’ve had a mortgage application approved, found your dream home, hired a solicitor and had the property surveyed, it’s time to review the on-going costs of being a homeowner.
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.
1. 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.
2. 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.
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 cost £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 on the purchase.
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 electric will depend on your provider but as of May 2019, the average variable tariff for a dual fuel customer was £1,254 according to Ofgem. 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. 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.
A recent Cable.com study found that Brits spent £30.30 each month on average on their broadband bills.
5. TV License
If you plan on watching television in your new home, the cost for a TV license for the year is £154.50 and this cost can be spread. If you do not pay for a TV license you could face fines of up to £1,000.
Other Costs to Consider
Whilst you're planning your budget, don't forget to factor in the cost of your removal as well as other quick one-off costs that are required before you fully move in. Decide if you'd like help with packing, storage or any other services that may be on offer too.
House Removal Cost
The estimated cost of moving house in 2019 in the UK is £1,181, based on a 3-bed house, with the removal company travelling 50 miles. This figure includes the cost of the removal company, in addition to packing services and materials (£25) and the dismantling and reassembling of furniture (£125).
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.
You will need to arrange to have any mail 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.
During the house buying process, you may need to consider using a storage facility. This could be for furniture acquired prior to the purchase or 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.
How to Save on Your Move
Compare My Move will help you at every stage of your house purchase. From comparing conveyancers, hiring a chartered surveyor and helping you find a removal company, we’ll be there for you. Compare your move with us and save up to 70% on the costs.