Moving house is an exciting step towards a new chapter in life. You could be buying a house for the first time, moving in with your partner, or moving further afield for a new job. Whatever the case may be, moving house is a big change and, hopefully, a change for the better.
However, moving house can be a costly affair. Costs can rise even more if you have to sell your old house as well. Though, even a first-time buyer will have to fork out for expensive moving costs. House removal costs are the most obvious expense when moving house, but extra charges also need to be considered. For example, if you have bought a house using a mortgage, there are legal fees, a mortgage deposit, and building insurance, and you may also have to pay stamp duty.
This article will outline the cost of moving house. It will also break down which types of buyers will have to pay more and which type will pay less.
Do I have to pay for stamp duty?
A person may have to pay a stamp duty charge at varying rates depending on the property price, where in the UK the house is purchased, and if they are a first-time buyer or not. For example, in England and Northern Ireland, no Stamp Duty is required when buying property costing £125,000 or less. Furthermore, a first-time buyer in these countries is exempt from paying Stamp Duty if the property price is £300,000 or less. After that, Stamp Duty goes up in percentage increments as shown below.
|PURCHASE PRICE OF PROPERTY||STAMP DUTY RATE||STAMP DUTY RATE FOR ADDITIONAL PROPERTIES|
|Up to £125,000||0%||3%|
|£125,001 to £250,000||2%||5%|
|£250,001 to £925,000||5%||8%|
|£925,001 to £1.5 million||10%||13%|
|Over £1.5 million||12%||15%|
This means that because the average property price is £295,888 in England, and £159,151 in Northern Ireland, most people in these countries will be charged for Stamp Duty. However, someone buying for the first time can buy a property matching the average house price without paying Stamp Duty.
In Scotland, things are a bit different. Instead of paying Stamp Duty, buyers pay Land and Buildings Transaction Tax. When buying a property for the first time in Scotland, you do not have to pay this tax unless the house costs more than £175,000. This is slightly below the average property price of £180,822. The LBTT rates for people that have already bought property start at 2%.
|PURCHASE PRICE OF PROPERTY||LBTT RATE||LBTT RATE FOR ADDITIONAL PROPERTIES|
|Up to £145,000||0%||4%|
|£145,001 to £250,000||2%||6%|
|£250,001 to £325,000||5%||9%|
|£325,000 to £750,000||10%||14%|
In Wales, things are different yet still. Instead of Stamp Duty, they instead pay Land Transaction Tax. People do not receive any LTT relief when buying property in the country. However, there is a higher property price threshold where buyers are exempt from tax. The price threshold is £180,000 which is lower than the average purchase price of £205,114. The full breakdown of rates is shown below.
|PURCHASE PRICE OF PROPERTY||LAND TRANSACTION TAX RATE||LTT RATE FOR ADDITIONAL PROPERTIES|
|Up to £180,000||0%||4%|
|£180,001 up to £250,000||3.5%||7.5%|
|£250,001 to £400,000||5%||9%|
|£400,001 to £750,000||7.5%||11.5%|
|£750,001 to £1.5m||10%||14%|
As you can see, there are many different variables that decide how much Stamp Duty (or equivalent) you pay. However, this is just one cost of moving house.
How much do I need for a mortgage deposit?
Again the deposit required for a property depends on many different variables. A government-backed mortgage scheme has been set up to help people buy a house for the first time and for current owners to buy a new house.
This scheme means that buyers can secure a mortgage for as little as 5% of the property price. This is so long as they meet all the credit/affordability checks and the property costs less than £600,000.
What property purchase fees do I need to pay?
There are also several added fees when buying a property that quickly adds up and drains your funds.
Before a lender offers you a mortgage they will first need to independently value the building to ensure it is a worthwhile investment. To do this they may charge a mortgage valuation fee which can range from £150 to £1500. This valuation will help them establish how much they are willing to lend against the property. Some lenders do not charge a valuation fee.
To assess the structural health of a property, you will have to pay a surveyor’s fee. A property survey could be a standard home conditioning property survey, which costs in the region of £250. Or it could be a complete structural survey which can cost £600 or more.
A property survey is important as it allows you to see any damage to the property. This ensures you do not end up buying a property that will decrease in value or become uninhabitable.
When you are buying a new property, you will have to pay legal fees. These solicitor fees allow a legal professional to create the paperwork showing that you legally own the new property. If you are selling your old property at the same time, you also need to pay solicitor fees for this.
The legal costs are in the region of £850-£1,500 on average, which includes a 20% VAT rate. They also normally charge around £250 to £300 in local search fees. This is to check for any problems or relevant plans in the local area that may be of concern.
Electronic transfer fee
A lender will charge a fee for transferring the money to the solicitor. This is often around £40 to £50.
Estate Agent Fees
Estate agent fees are relevant for people who are selling their old house to buy a new one. Paying an estate agent to sell your house can cost thousands of pounds in some cases. For example, if you sold your house for £275,000 with a fee of 1.18% +VAT it would cost you £3,894. Typical rates for selling a property using an estate agent are between 0.75% to 3%.
You will only need to pay an estate agent’s fee if selling your previous property. This means that first-time buyers do not need to worry about this expense.
There are also additional fees if you are buying using a mortgage. A booking fee, also known as an application fee, or mortgage reservation fee reserves the loan amount until the mortgage is finalised. This is a non-refundable fee costing anywhere from £99 to £250.
You also need to pay an arrangement fee when taking out a mortgage. This fee is charged by the lender for organising the deal. This can cost anywhere up to £2,500. This can be added to the mortgage or paid upfront.
How much do house removals cost?
The cost of moving house is also dictated by the price of house removals. If you have to take large amounts of furniture and other items to your new home, you will likely need help from a removal company. If, however, you have previously been renting a fully furnished flat and or do not have a lot of items to take, you could get away with moving the items yourself.
According to Checkatrade, the average costs of property removals are around £50 to £60 per hour. This includes two removal professionals and a van. The average cost of moving your possessions to your new home is around £200 in total. Removal companies also provide a packing service – typically around £20 per hour. The average total cost of this is also around £200.
As to be expected, larger houses with more items cost more, as does travelling a long distance to a new home. If, for some reason, you need to first store your property before moving it, you will have to factor in storage costs. Storage costs can vary depending on the size of the storage unit needed and the length of time it is stored. A 50 sq ft unit will cost around £22 a week. A 200 sq ft unit will cost around £88 a week.
Building insurance covers the repair or rebuild cost of your property if it is destroyed or damaged. As well as the structure of the property, it also covers:
As a mortgage lender may stand to lose money as well if the property is destroyed, they almost always make property insurance a compulsory requirement. However, even if you do not have a mortgage, it helps to protect your assets.
According to The Association of British Insurers, the average price for combined contents and buildings insurance is £307 per year. This was 2% less than the previous year and the lowest price in four years.
What are the ongoing costs of moving house?
Before committing to buying a new house, it is important to assess the affordability of ongoing costs. Council Tax, for example, raises in line with the value of your property. So if you have stretched your budget by buying an expensive house, just be wary that Council Tax will also be higher for an expensive house. The average Council Tax band is D, which is around £1,898 per year.
You may also have to pay service charges if your building shares a communal area. This is for the management and maintenance of these areas. Typically this costs around £100 to £200 per month.
If you buy a leasehold property, you may also have to pay ground rent for renting the land the property sits on. Ground rent is usually 0.1% of the property’s purchase price. However, some also charge a flat fee of £250 per year. Freehold property owners do not need to worry about this.
There are also energy prices to factor in. This is especially important to budget for as a sharp increase in energy prices has sparked an energy crisis, with many worrying they cannot pay the bills.
What are the average costs of moving house?
Although you can get a deposit for as little as 5%, it is recommended you have at least a 20% downpayment. This is because you will get better interest rates with a larger deposit. This also means that despite the 5% rate being introduced to help people onto the property ladder, those with less money still pay more. The average deposit price for first-time buyers was £53,935 from 2020 to 2021. More average price ranges can be found below:
- Valuation Fee – £150 to £1500
- Home conditioning survey – £250
- Full structural survey – £600
- Legal fees – £850-£1,500
- Electronic Transfer Fee – £40 to £50
- Estate agent rates – 0.75% to 3%
- Mortgage booking fee – £99 to £250
- Mortgage arrangement fee 0 – £2,5000
- Property removal cost – £200
- Contents and building insurance – £307 per year
- Council Tax – £1,898
- Service charges if applicable – £100 – £200 per month
- Ground rent if applicable – £250 or 0.1%
As you can see, all of the extra, sometimes unforeseen charges add up to a pretty penny. Hopefully, these figures allow you to better assess your financial situation and budget more effectively for the big move.