The cost of buying a house

Every year, thousands of people buy their first home in the UK. With so many people taking their steps on the property ladder, you'd think the process is simple.

Unfortunately, buying a house can be both complex and expensive. Thankfully, there’s enough research into the costs involved to make things a little easier for newcomers.

In this guide, we explore the different ongoing costs associated with buying a house. Costs are examined chronologically in the order of which you pay them.

How much money do you need to buy a house in the UK?

As of May 2023, you need at least £34,079.10 to buy a property with a purchase price of £285,861 according to HM Land Registry.

What are the main costs?

Purchasing a house involves various expenses that hinge on the kind of buyer you are. You don't have to stress about estate agent fees, but there are key costs that everyone planning to own a home should be ready for. Check out the info below for a clearer view.

Essential costs

Optional costs

Conditional costs

Essential costs

1. Conveyancing fees

Once a vendor accepts your offer, you need a conveyancing solicitor (or conveyancer) to take care of the legal side of the transaction.

Conveyancers are essential for both buyers and sellers in property transactions. The work they do helps make a property purchase legally binding.

How much does conveyancing cost?

On average, if you’re buying a house, solicitors should cost around £1500 to £2000 in solicitor fees, while disbursements could take the figure even higher.

Legal fees for buying property are generally more expensive than those for selling. Buying property involves more legal and administrational work for the conveyancer. As a result, fees are more expensive, and disbursements (expenses paid by the conveyancer or solicitor on your behalf) are greater in number.

What do conveyancers do?

Conveyancing solicitors handle all the legal aspects of property transactions, including:

• Property searches
• Transferring the mortgage deposit
• Exchanging contracts
• Confirming the completion date
• Receiving and transferring the property purchase amount
• Registering your ownership with Land Registry
• Paying Stamp Duty Land Tax (SDLT)
• Paying all expenses associated with buying (Disbursements)

All of these things make solicitors vital to all property purchases. They, along with a seller’s estate agent, act as a go-between you and the seller, who you'll likely never meet.

2. Disbursements

While some disbursements can be classified as optional and conditional expenses, it’s likely you’ll have to pay the bulk of these expenses.

3. Mortgage valuation fees

Once your offer has been accepted, and you’ve found a deal you like, your mortgage lender will send an expert to evaluate the property. This is what’s known as a ‘mortgage valuation’.

Lenders order valuations to ascertain whether the property actually meets their mortgage guidelines. If the valuer deems that the property is worth less than what you applied for, the lender will either reject your application, or alter their conditions.

As mortgages are an essential part of most property transactions in the UK, a mortgage valuation is an essential fee.

How much does a mortgage valuation cost?

Based on our research, the average mortgage valuation fee for a £285,861 property should come in at £200 - £400. However, rates may vary depending on the price of your property and the mortgage deal you choose.

4. Mortgage arrangement fees

Mortgage arrangement fees are fees charged by the mortgage lender for setting up the mortgage loan itself. These fees cover administrative costs related to processing the mortgage application, conducting credit checks, and other tasks associated with finalising the mortgage agreement.

How much do mortgage arrangement fees cost?

On average, for a property priced at £285,861, you can expect a mortgage arrangement fee of £1000.

However, arrangement fees for standard residential mortgages could be from £0 to £2,000. However, it's important to note that some mortgages might have no arrangement fees, while others might have higher fees associated with special features or lower interest rates.

5. Mortgage deposit

A mortgage deposit, or house deposit, is a percentage of the property's purchase price your lender wants paid upfront. The rest of the property will be paid for by the lender, and will make up the total mortgage.

How much does a mortgage deposit cost?

For a property priced at £285,861, a deposit priced at 10% of the property's value would be £28,586.10

Of all mortgage fees, your deposit is the most expensive. A deposit is usually 10 - 20% of the property’s final sale price, though this entirely depends on both your circumstances, and Loan to Value ratio (LTV).

The more risk a lender takes on by investing in your property, the higher your LTV. This can affect the amount of the deposit your lender needs, as well as your mortgage interest rate. The higher your interest rate, the harder it gets to pay back your mortgage.

6. Stamp Duty

Stamp Duty Land Tax (SDLT) is a government tax on the purchase of land or property in England. In Scotland, Stamp Duty is called Land and Buildings Transaction Tax (LBT), while in Wales, it’s called Land Transaction Tax (LTT).

How much does Stamp Duty cost?

Stamp Duty is a proportional tax, which means you need to pay a percentage that increases with the final purchase price of the property.

If you’re a first time buyer, you don’t have to pay Stamp Duty on the portion of the property that is worth £250,000, and then 5% on the £35,860 thereafter, which is £1793.

The current Stamp Duty thresholds are as follows:

Optional costs

1. Financial advisor fees

While not essential, hiring a financial advisor can help you go a long way while you save up for that house deposit, especially if you’re a first time buyer. Mortgage deposits are extremely expensive and it can take years to save up for one.

A financial advisor frames your home purchase alongside your other financial requirements, and judges how much, and how long for, you would need to save.

When you hire a financial advisor, they analyse your income, outgoings and expenses to help shape a personalised savings plan. They can also help you work out what type of property is within your budget, including its monthly mortgage repayments and taxes.

How much do financial advisors cost?

The average cost for a financial adviser in the UK is £150 per hour, although it can vary from £75 to £350 per hour, according to the Money Advice Service.

2. Mortgage broker fees

Like financial advisors, mortgage brokers are not essential - nevertheless, they are a valuable asset for first time buyers. Mortgages can be extremely difficult to navigate, and if you are nervous about your first application, a broker can advise which mortgage package is likely to work best.

Like a financial advisor, mortgage brokers assess your financial situation and provide advice. Unlike financial advisors, these specialists provide advice about your mortgage options.

Thanks to their extensive knowledge of all available mortgage packages and lenders, brokers can assess your credit report and help locate a lender that is likely to accept your application.

In some cases, mortgage hopefuls have been rejected even after an Agreement In Principle (AIP). In such a scenario, a broker can prove invaluable, especially if you’ve already agreed to purchase the property.

How much do mortgage brokers cost?

Mortgage brokers tend to charge a percentage of the total loan amount. The average mortgage broker in the UK charges 0.65%.

3. Property surveys

Before you finalise the purchase of your new home by instructing your conveyancer to exchange contracts, it's important that you first ensure your new home is both structurally sound and secure.

Indeed, many mortgage providers require the results of a property survey in order for your application to move forwards.

What types of property surveys are there?

There are several types of surveys available for different types of properties. The most common include:

Homebuyer’s report

Tailored to properties less than a century old, a homebuyer’s report is a non-invasive survey that typically spans two to four hours. This comprehensive report furnishes specialised insights into issues impacting the property's value, offering estimated repair costs and guidance on continuous maintenance.

Snagging survey

Snagging surveys are specifically tailored for newly constructed homes, commonly referred to as 'new builds'. A property that has undergone construction, conversion, or refurbishment within the past two years falls under this classification.

During a snagging survey, the surveyor meticulously pinpoints any incomplete elements and defects, enabling you to prompt the developer for prompt resolution.

Structural survey

A comprehensive structural survey is designed for notably aged or architecturally unique properties. These surveys involve an exhaustive exploration of every facet of the property.

Occasionally invasive, they involve procedures like wall drilling to assess structural integrity and the lifting of floorboards. Following completion, you will receive a comprehensive report detailing everything, including any issues that influence the property's safety and value.

How much do property surveys cost?

The cost of property surveys can vary significantly based on several factors, including the type of survey, the size and value of the property, the location, and the surveying company. Generally, you are looking at an expense of £200 to £2000.

4. Buildings insurance

Buildings insurance is a type of insurance policy that protects you from losing money if your new home is destroyed. It covers several types of damages, including:

• Fire
• Flooding
• Earthquakes
• Thefts
• Vandalism

Buildings insurance does not cover damages from pests, frost and leaking gutters.

While required by most mortgage lenders, buildings insurance is not essential - but it's highly recommended.

How much is buildings insurance?

There isn’t a set price for this insurance policy because many firms offer different rates. Some of the most popular websites to compare quotes are Comparethemarket.com and Moneysupermarket.com.

On average however, a typical buildings insurance policy costs £130. However, rates may vary due to both national and regional factors.

Conditional costs

1. Mortgage exit fees

If this property purchase is your second, and you’re looking to either remortgage or exit your previous mortgage, you’ll need to pay a mortgage exit fee. If you’re still in your tie-in period, you may need to pay an early repayment charge.

How much do mortgage exit fees cost?

Mortgage exit fees generally cost £150, but can cost anywhere from £50 - £300. They are sometimes known as a ‘deed release’ or ‘final fee’.

2. Early mortgage repayment charges

If this is your second property purchase, you may or may not have a mortgage left to pay off. If you’re looking to move before the end of your mortgage tie-in period, you’ll have to pay what’s called an early mortgage repayment charge.

How much does an early mortgage repayment charge cost?

Early repayment charges can be 5 - 10% of the remaining mortgage amount. To avoid paying the fee, make sure you remortgage after the tie-in period is complete.

3. Removal fees

You may need help from a local removals company when you move home. Removal services aren’t exactly cheap, but there isn’t an alternative, especially if you’re moving into a second home and have a lot of furniture to transport.

How much do removal companies cost?

A typical removal company costs £175 per day, but rates may vary based on the size of vehicle used, distance travelled, as well as any added insurance policy.

4. Storage fees

If you’ve sold your home already, or are currently renting, you’ll need somewhere to store your furnishings and items before moving day. There are several storage facilities available, with England’s most popular being Big Yellow Storage.

How much does storage cost?

Storage units vary in cost. We asked Big Yellow Storage on the 15th August 2023 for quotes in Manchester and London (Zone Two). We received the following for a storage room of 100 square feet for three months:

• Storage (Manchester): £460.80
• Storage (London): £674.40

Summary: The costs demystified

Hopefully, you now have a better understanding of the costs involved with buying a property in the UK. While there is room for considerable regional variation, as well as individual circumstance, you can expect to pay something within the realms of £34,079.10 for a 3-bedroom property.

For more cost crunching, check out our guides to the costs of selling and Stamp Duty.