Why is moving house so flipping expensive? It’s a very good question. Moving house costs the earth and the reason is simple: there are many more costs and fees that you have to pay when you move into a new home than just the mortgage and stamp duty. In fact, the list of costs associated with buying a new house and moving is quite daunting. Let’s take a closer look at what exactly you’re paying for.
According to recent findings by Lloyds Bank, in 2013 the average cost of moving house in the UK is £8248 – a 6% increase from 2012. It gets worse for those living London, where the average cost of moving house is a jaw-dropping £20,825. The overall increase is due to 7% increases in each of the following: stamp duty, estate agents fees and legal fees.
Obvious and hidden costs of buying property and moving house
There are some obvious costs when you’re buying a house, like the mortgage, estate agents fees and stamp duty. Those are the costs that everyone knows about and expects, but what are some of the other costs involved in the rather complicated process?
- Conveyancing fees and legal costs
Buying and selling property is complicated, involving lots of red tape which a solicitor or conveyancer navigates on your behalf. Fees vary depending on the service provider, so shop around if you can. Many buyers use the solicitors/conveyancers chosen by the sellers, but you can ask to use your own if you like.
- Removal costs
Shop around before you pick a moving company to help you move all your belongings to your new home because costs differ. You can also save costs by doing the packing yourself and by using a small removal company to move only your big furniture and appliances, like the beds, lounge suite, tumble dryer and dish washer. You can move your own clothes, books, TVs, DVDs, linen and crockery and cutlery. Don’t leave it too late, as many moving companies charge extra for last minute bookings. And don’t move on Fridays or bank holidays – yes, these days may be convenient for you but you will pay extra for them.
Some estate agents include the cost of an energy performance certificate (EPC) in their fees, but some online estate agents offer at as an optional extra, giving you the chance to try and lower your costs yourself. Sellers have to provide an EPC, so if you’re buying your first house you don’t have to worry, but if you’re selling your property in order to buy a new home, then you’ll have to factor an EPC assessment into your costs.
- Mortgage-related costs
Unfortunately, your mortgage isn’t as straight-up as you might like to think; there are actually several hidden costs. For example, there are mortgage set-up fees (booking fees), which, according to The Money Advice Service, can be up to £250. There is a mortgage arrangement fee, which can be up to £2000, a valuation fee, which can be up to £1500, the mortgage account fee, which is up to £300, and a higher-lending charge (mortgage indemnity) for the provider to take out insurance in case you can’t pay back the loan, which is typically 1.5% of the mortgage.
There’s also mortgage payment protection insurance, which may be required by your lender. It’s a good idea to get it anyway, even if it isn’t required, so your payments will be made if you can’t work due to illness.
- Searches and surveys
Searches are carried out to determine if there are planning or local issues that will affect the property’s worth. Surveys are carried out to determine the structural integrity of the property. You can choose between three house survey types, each with different costs: Home condition survey (the cheapest and most basic), homebuyers report (more in-depth and more expensive) and building/structural survey (most comprehensive and expensive).
You will have to buy buildings insurance (for the structure) on a freehold property and you should seriously consider contents insurance (for your belongings) – if you don’t have it already. Some mortgage providers insist on life insurance to cover the mortgage in the event of your death – it’s cold but you should consider it even if it’s not required to take the financial burden off your surviving relatives.
- CHAPS fee
Clearing House Automated Payment System (CHAPS) is a telegraphic transfer fee that your lender will charge to transfer money to your solicitor. It’s not big about £30, but everything adds up.
- Land registry fee
This is to register the change of ownership of the property. The exact fee depends on the purchase price, so the more you pay for your property, the higher the fee will be. As you can see, there are loads of costs you need to consider when you buy a new house. All of which add up to making moving home a rather expensive venture. You can cut costs by using an online estate agent, like Tepilo. So contact us to find out more.