A guide to the hidden costs of buying a property

Buying a property is a huge financial commitment, and it’s essential to be aware of the various costs involved beyond the purchase price.

In many cases, buyers have taken into account the cost of the deposit and how much their monthly mortgage repayments will be – but there are other expenses you should be aware of.

Being aware of these additional costs will help you better prepare financially for purchasing a property, and by budgeting for these expenses, you can ensure a smoother buying process. It can also help you avoid any unwelcome surprises further down the line.

We have gathered a list of costs you should take into consideration when purchasing a property:

1. Deposit

The deposit is a percentage of the property price paid upfront. Typically, this ranges from 5% to 20% of the property price, depending on your mortgage terms. It’s a substantial amount that you need to save before you can proceed with your property purchase.

2. Stamp duty

Stamp duty is a tax on property purchases in the UK. The amount varies based on the property price and your buyer status (first-time buyer, second home, etc.). Stamp duty calculators are available online to help you estimate this cost accurately.

3. Mortgage fees

Several fees are associated with obtaining a mortgage:

Arrangement Fee – Charged by the lender to set up the mortgage, typically ranging from £500 to £2,000.
Valuation Fee – The lender’s valuation of the property, costing between £150 and £1,500.
Booking Fee – Sometimes charged to secure a fixed-rate mortgage.

4. Surveyor’s fees

Conducting a survey to assess the property’s condition is vital. The types of surveys include:

Basic Condition Report
Homebuyer Report
Full Structural Survey

Survey costs can range from £250 to £1,500 depending on the survey type.

5. Legal fees

You’ll need a solicitor or conveyancer to handle the legal work of buying a property. This cost covers the legal processes, including title transfer and contract checks.

6. Searches

Your solicitor will conduct various searches to ensure there are no issues with the property. These include local authority searches, environmental searches, and water authority searches.

7. Removal costs

Moving your belongings to your new property involves removal costs, which can range from £300 to over £1,500 depending on the distance and the amount of belongings.

8. Insurance

Building Insurance – Often required by mortgage lenders, typically costing around £100 to £200 annually.
Contents Insurance – Protects your belongings, with costs varying based on the coverage.

9. Broker fees

If you use a mortgage broker, they may charge a fee for finding and arranging your mortgage. This can be a flat fee (e.g. £500) or a percentage of the loan (e.g. 1%).

10. Moving-in costs

Funds should also be put aside for any work or appliances that need to be purchased in your new home.

Repairs and Renovations – Immediate work needed upon moving in.
Furniture and Appliances – Costs for furnishing your new home.
Utilities Connection – Fees for connecting services like electricity, gas, water, and internet.

11. Maintenance and service charges (if applicable)

If you buy a leasehold property or an apartment, you may have to pay maintenance and service charges for the upkeep of communal areas.

These charges vary widely and can be monthly or annual, ranging from £50 to several hundred pounds per month. This can also be the case if your new home is on an estate not owned by the council, as the developers may take a fee towards for the upkeep of the area.

12. Council tax

Council tax is a local authority tax for services like waste collection and street cleaning. The amount is based on the property’s valuation band, ranging from a few hundred to over a thousand pounds annually. Visit your local council’s website for an idea of how much council tax you will be paying.

13. Contingency fund

It’s a good idea to set aside a contingency fund for unexpected expenses. A buffer of around 5-10% of the property price is advisable to cover any unforeseen costs that may arise during or after the purchase.