The average homeowner spends more than £8,000 just moving house. Here's where that money goes, and how to cut the costs.
Whether you need to move up the property ladder, downsize or move to a different part of the country, moving house is expensive.
According to research from Lloyds Bank, UK homeowners spent more than £6 billion on moving in 2013, up from £5.2 billion in 2012. On average households paid £8,248 to move house, 25% of average earnings. In London this figure rises to a massive £20,825.
So what are movers spending their money on and how can you cut the cost?
Stamp Duty
Stamp Duty Land Tax is charged on land and property transactions in the UK and is one of the biggest costs when moving home.
The Stamp Duty thresholds are detailed in the table below:
|
Purchase price |
Stamp duty rate |
|
Up to £125,000 |
0% |
|
£125,001-£250,000 |
1% |
|
£250,001-£500,000 |
3% |
|
£500,001-£1 million |
4% |
|
£1 million-£2 million |
5% |
|
£2 million+ |
7% |
|
£2 million + (if bought through ‘corporate envelope’) |
15% |
One of the main criticisms of Stamp Duty is that if the value is above the payment threshold, Stamp Durty is charged at the appropriate rate on the whole of the amount paid. So a property that sells for £249,999 would attract a tax bill of £2,499.99 but if you paid just £1 more your tax bill would shoot up to £7,500.
How to reduce the cost: Wherever possible look for properties that fall just under the threshold, or negotiate a sale price that keeps the property in a lower band. Read How to beat Stamp Duty..
Estate agency fees
Estate agents take a fair whack for the work they do in selling your home. According to Lloyds the typical mover paid their agent £2,967 in 2003, but this had shot up to £3,601 by last year.
[SPOTLIGHT]With most estate agents charging commission on the sale price, the more expensive the property you sell, the more you pay. With the average house worth £458,000 in the capital, Londoners moving home and paying a typical 1.6% fee will pay their agent £7,328 plus VAT.
How to reduce the cost: Online estate agents are much cheaper and can work well in a seller’s market. Emoov, for example, has pricing deals starting at £395. Read The pros and cons of online estate agents.
Another option is to opt for “sale by tender” which pushes the majority of the costs on to the buyer.
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Legal fees
When you move house you need a solicitor or conveyancer to do all the legal work. Costs vary depending on the firm you use and the type of property you’re buying or selling. For example, there will be an extra cost if you’re buying a leasehold property. Solicitors will also charge you separately for searches and Land Registry fees.
According to Lloyds, legal fees have gone up 21% in the past decade, with movers paying an average of £1,000.
How to reduce the cost: Shop around but bear in mind you get what you pay for. Look for a 'no sale, no fee' service where you don’t pay the solicitor if the sale falls through.
Surveyor’s fees
It’s a good idea to get a survey done on any property you’re buying to check there are no major defaults. Your mortgage lender will carry out a valuation, but this won’t contain the detail of a full survey.
According to Lloyds surveyors’ fees have gone up 25% between 2003 and 2013 from £435 to £545.
How to reduce the cost: Again, shop around but money spent on a survey is often money well spent. Use any defects found in a survey to negotiate a lower sale price. Read What type of home survey do you need?
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Removal fees
As your move date gets closer you’ll need to think about how to pack up your life and transport it to a new home. According to Lloyds it cost an average of £862 to move your belongings in 2003 and £1,100 in 2013.
How to reduce the cost: Most professional removal firms will offer a packing service too, but it’s cheaper if you pack yourself.
To cut costs even more check out anyvan.com. You describe what needs moving where and specify your dates. Firms will then compete for your job and you can choose the one you want.
Mortgage fees
Funnily enough, despite being a mortgage lender Lloyds Bank didn’t include mortgage fees in its report. Arrangement, booking and completion fees vary from mortgage to mortgage and can add up to several thousand pounds in some cases.
How to reduce the cost: Take the fees, as well as the interest rate, into account when working out the best mortgage for your needs. Bear in mind that the more often you remortgage, the more often you’ll have to pay all the fees.
You can compare mortgage deals with the lovemoney.com mortgage engine.