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Initial Costs To Consider When Buying A Property

Posted on 27 July, 2017

1. Stamp duty

If you’re not a First Time Buyer you must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price (£125,000). The amount of Stamp Duty you pay will be dependent on the price of the property.

On 22 November the chancellor abolished Stamp Duty for First Time Buyers purchasing properties up to £300,000.

Those buying a home worth up to £500,000 will not have to pay stamp duty on the first £300,000

PC Note: Anyone purchasing an additional home including buy to let properties will have to pay an extra 3% surcharge on top of each stamp duty band.

PC Budget Tip: £250 minimum if purchasing a property over £300,000.

2. Valuation fee

Mortgage valuations can give you a rough idea of whether you are paying too much for a property. The valuation is commissioned by your mortgage lender, and is for their benefit, however the cost is the responsibility of the buyer. The valuation is very limited in scope and is only likely to uncover obvious, visible defects as part of what is a brief inspection.

PC Note: Some lenders will allow you to add the fee to the cost of your mortgage, additionally some lenders may waive the fee as an incentive for you to use them as your mortgage provider.
PC budget Tip: £100 – £400.

3. Surveys

The cost of surveys depend on the type of survey (if any) that you decide to carry out.
There are three main types of property surveys offered by the RICS
     a) Survey Level One: RICS Home Condition Report (HCR)
A fast and comprehensive survey that provides an overview of the condition of the property and highlights anyway major defects/areas of concern.  The conditions report uses simple ‘traffic light’ ratings to clearly identify the condition of the key elements of the property. Typically, the lowest priced of the surveys, it is aimed at conventional properties and newer homes.
PC Budget Tip:  £100 – £200

     b) Survey Level Two: RICS HomeBuyer Report (HBR)
This is most suitable for conventional properties which are in reasonable condition. The report specifies major defects and includes a roof inspection where possible, but does not detail remedial works. Advice can be given on specific items if required, and if further specialist investigation is thought necessary this will be stated in the report. These reports are most suitable for houses built during the last 80 years and up to approximately 2,000 square feet / 185 square metres.

PC Case Study: A Homebuyers `report at one of our current properties found there was damp in the property. We managed to renegotiate £10,000 off the price of the property (remedial works cost £3000), a saving of £7000 that we would have never achieved if we did not carry out the HomeBuyers Report.
PC Budget Tip: £250 – £500

     c ) Survey Level Three: RICS Building Survey

Essential for larger or older properties, or if you’re planning major works. The most comprehensive report provides you with an in-depth analysis of the property’s condition and includes advice on defects, repairs and maintenance options. It is also highly advisable for older properties (pre 1900) or large or unusual buildings.
PC Budget Tip: £500 +
PC Note: You can often ask your lender to carry out a survey for you along with the valuation survey or can you do it independently.
PC Note: Depending on the seriousness of any defects and the cost of repair work, the buyer may be able to re-negotiate the purchase price or decide not to purchase the property at all.

4. Deposit

This is the biggest of all the costs associated with buying a property. The amount of deposit you pay will vary depending on your individual circumstance.
As a minimum, you will have to put down at least 5% of the property price as a deposit.
PC Budget Tip: £10,000 minimum if purchasing a property over £200,000.

Mortgage advisers within banks/ building society’s are generally free of charge. However, if you use an independent broker (who have access to a wide range of deals) there will be a charge. Once again; this price will vary from broker to broker.
PC budget Tip: Up to £400.

5. Conveyancer Fees

You’ll need a solicitor or licensed conveyor to carry out all the legal work when purchasing a property. Conveyancing costs vary depending on the work involved and the value of the property, and normally range from £500 to £1500.

On top of your basic conveyancer fee, you will have to pay disbursement costs. These are fees that your conveyancer pays on your behalf through the selling process.

Conveyancing – Purchase Disbursements for Buying a Property

Bankruptcy Searches – Between £2 – £5 – This search will reveal if any of the buyers are currently bankrupt or are about to be made bankrupt by virtue of any pending court actions.

Office Copies & Title Plan (Official Land Registry Copies) – Between £6 – £10 – Your solicitor will obtain an official copy of the title deeds / title plan from HM Land Registry. These documents help to confirm details of the property you’re looking to purchase

ID Check / AML Checks – Between £5 – £15 – Due to Anti Money Laundering (AML) Regulations, your conveyancer will need to verify the identity of all parties involved in the purchase of a property.

Telegraphic Transfer Fee (TT Fee) – Between £15 – £40 – Your solicitor will be responsible for the electronic transfer of any money from yourself to the lender and from the mortgage lender, to the seller’s solicitors / conveyancing firm.

Property Searches – Between £150 – £280 – Your solicitor will conduct searches relating to the property you are looking to purchase. These searches are a combination of environmental reports, flood reports, water / drainage reports, local authority reports and chancel liability checks.

PC Note: This list is not exhaustive, and other fees may be payable for some properties.

*This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published.

Need a mortgage advisor? Complete this form to get a free initial consultation with our impartial mortgage brokers Arne Grey

Need a conveyancer? – Complete this form to get a quote from our carefully selected Conveyancing partner Mullis & Peake.

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