The Hidden Costs of Buying Property in the UK: Unveiling Taxes and Fees You Need to Know

Setting a budget for your new home and applying for pre-mortgage approval is only the first step towards buying a house. After that comes the process of house hunting, choosing the right estate agent, hiring property valuators and surveyors to inspect the house and finally getting in touch with a good solicitor to deal with all the paperwork. And with these additional steps come additional costs. conveyancing solicitors Manchester Market experts talk about the hidden costs of buying a house in the UK as well as the various taxes and fees that you need to know about.

Buying agent fees

Many buyers opt to hire a buying agent, as a buying agent works solely in the interest of the buyer. For instance, a seller may hire estate agents in Leeds to put their home on the market and then the seller will pay the estate agent once the sale goes through. On the other hand, a buyer could hire a buying agent who will research the market, help them find the right property and negotiate a deal with the seller. Since the buying agent works for the buyer, he or she will be paid a percentage of the purchase price by the buyer. This hidden cost could range from 1 per cent to 3 per cent of the purchase price.

Solicitor fees

Both buyers and sellers in the UK will have to hire a solicitor to deal with the legal aspect of the sale, such as the paperwork, drafting the contract and dealing with the final exchange of contracts. A solicitor will handle all the paperwork that is needed to buy and sell the property, and once the offer has been accepted, the buyer’s solicitor will pay the initial deposit to the seller’s solicitor while making sure that everything goes smoothly. The fee of a solicitor could be a flat fee, an hourly fee or a percentage of the purchase price. You should set aside £500-£1500, plus VAT, as solicitor fees.

Survey and inspection fees

If you decide to hire a property surveyor or a property inspector to thoroughly check the house and give you a valuation for the property, then you need to account for these costs too. Usually, a property surveyor in the UK will charge anywhere between £300 to £500. During this inspection, the surveyor will point out any red flags such as fungus, mould, plumbing problems or damaged roofs as well as any minor damages and necessary repairs.

Mortgage fees

Apart from the monthly interest and the repayment of the mortgage, there are quite a few associated charges when it comes down to getting the mortgage. For one, you may have to pay between £1,000 to £2,500 as the arrangement fee along with a booking fee that ranges from £99 to £250. Additionally, you may also be required to pay a mortgage valuation fee which could be anywhere from £100 to £1,500. And, let’s not forget about the mortgage broker fee which could reach up to £500.

Insurance costs

Now once you have your mortgage in order, your mortgage lender is going to ask you to take out insurance on your new property. This means you are going to have to purchase building insurance or property insurance for your new home which could range from £150 to £300 depending on the insurance company and the type of insurance. You may also want to opt for contents insurance which will then insure the contents of your home in case of a robbery.

Stamp Duty Land Tax

Once the purchase goes through, you need to pay the Stamp Duty Land Tax. As of September 2022, the ‘nil rate band’ in the Stamp Duty Land Tax has increased from £125,000 to £250,000, which means you do not have to pay any stamp duty on the initial £250,000 of your purchase. For properties valued between £250,001 and £925,000, the applicable stamp duty is 5 per cent. There is a 10 per cent stamp duty for properties valued from £925,001 to £1.5 million and a 12 per cent stamp duty for properties valued over £1.5 million. As for first-time buyers, the ‘nil rate band’ has been increased from £300,000 to £425,000. Over and above the nil band rate, buyers are expected to pay the Stamp Duty Land Tax based on the value of their purchase.

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