IN a market where house prices seem to be tumbling (amounts dropped 1.4 per cent this year), many people are considering making the transition from renting to owning their homes. This is supported by news that buyers may be in a better position financially than renters – saving up to £396,000 in a typical London home over a lifetime.
But if you want to buy a property in London or elsewhere in the UK, how much can you afford? In addition to the cost of the property, there are numerous one-off costs that can range from around £2,000 up to £5,000 – and that’s not factoring in the larger costs like land tax and solicitors’ fees. Before even applying for finance or looking at the marketplace, therefore, it’s important to take these extra fees into account.
Although there are numerous items to consider including house hunting expenses, estate agents’ commissions, utility reconnection services and removal costs, here are some frequently asked questions about the least predictable once-off property fees:
How much are solicitors’ fees for buying a house? There is no standard conveyancing fee in the UK; some solicitors charge flat fees, others may charge a percentage of the property price and take into account the amount of paperwork involved and the skill required to facilitate the deal.
What is a home survey? There are three types of surveys that are worth their weight in gold in terms of their informational value:
• Lenders’ valuations are usually requested by financial institutions to ensure that the property is worth the price being paid for it.
• A homebuyer’s report, licensed by the Royal Institution of Chartered Surveyors, gives colour-coded condition ratings and can cost up to £500.
• A more comprehensive building or structural survey, often costing around £1,000, provides detailed information on the condition of the property and is recommended for older or structurally unusual properties.
Do I need to pay stamp duty? This is a form of tax, charged for properties that are valued above £125,000. For properties valued at between £125,000 and £250,000, the tax will be one per cent of the price, from between £250,000 and £500,000: three per cent, and properties costing £500,000 will incur a tax of four per cent of the property price. Home owners in areas designated by the government as “disadvantaged” are exempt from paying the Stamp Duty Land Tax.
Take additional costs into account before you start looking at prospective homes, and you can do this by following property finance guides and calculating exactly how much money you’ll need to spend and when.