Hidden Costs

The Hidden Costs of Buying and Owning a Property

Buying a new home can be even more expensive than you expect. There are lots of hidden costs that can add more than 10% to the total bill, which you need to budget for. Running a property also costs more than many former renters expect. If you don’t prepare for it, the first few years of owning your own home can be a time of real hardship.

The Hidden Costs of Buying a Property

Paying for your new home is the overwhelming cost, but there are many others that you will need to budget for.

  • Stamp duty can add many thousands of pounds, as much as 7%, to the cost of buying a home
  • Conveyancing is the legal process involved in buying a property, including various search fees and registering with the Land Registry. How much it costs depends on the value of the home you are buying, as well as which searches you have done. Conveyancing costs can range from £800 to £1500 and are more for leasehold properties. Solicitors tend to be more expensive
  • Surveys and valuations can also prove expensive, from a few hundred pounds to well over £1000, depending on the value of your property and what type of survey you have.
  • Mortgage indemnity fees – traditionally if you had a high loan-to-value ratio, your lender may charge you a fee that will cover the insurance that they take out in case you cannot pay back the loan. Thankfully most lenders now will not charge indemnity fees even for those borrowing more than 90% of the purchase price.  
  • Mortgage broker fees – Some mortgage brokers charge no fee, while others charge between a few hundred pounds up to 1% of your mortgage.
  • Estate agent fees – the seller rather than buyer pays these fees.
  • Life Insurance – provides a source of money you can rely on to cover any debt such as a mortgage in the event of your death. 
  • Removals –Hiring a professional removals firm can cost anywhere from £350 to many thousands of pounds, depending on the size of your house and how much you need to move.
  • Redecorating –Most homes require redecoration or other minor building works. DIY can reduce costs significantly but in reality most home owners spend far in excess of their original budget.

The Hidden Costs of Owning a Property

Once you have moved in there are many other costs to budget for which include:

  • Utility bills ( Gas, Water & Electricity ) These bills are virtually impossible to avoid although changing suppliers can significantly reduce costs.
  • Council tax must be paid by occupants of properties and prices can range from a couple of hundred pounds a year to several thousand for larger houses.
  • Buildings and contents insurance will depend on what you are insuring, how much your property is worth and the value of insured contents.
  • Ground rent & service charge – if you live in a leasehold property, you may have to pay an annual ground rent and service charge to the freeholder. You may also be liable for special contributions to work on common areas or the structure of the building
  • Service charges – If you live in a serviced apartment you will probably have an annual service charge to pay.
  • Residents’ parking – in many towns and cities you will need to purchase parking permits to park in the street.