Hidden Costs When
Buying a House

For most people, the largest additional cost of buying a property is stamp duty land tax. This is between 0-15% of the property’s value, meaning it can add several thousands of pounds.

The exact amount you pay depends on a few factors, such as the house’s value, how many properties you own, and even where you live.

A few people are exempt from paying stamp duty. If you’re a first-time buyer purchasing a property worth less than £425,000, you don’t have to pay stamp duty. First-time buyers also only pay 5% stamp duty on properties worth between £425,001 and £625,000 (and normal rates on anything above this).

The government may change this after April 2025.

Also, in England and Northern Ireland, there’s no stamp duty on properties worth less than £250,000.

The rules are slightly different elsewhere in the UK. In Scotland, only properties worth less than £145,000 are exempt from stamp duty, and first-time buyer properties up to £175,000. As for Wales, properties up to £180,000 aren’t subject to stamp duty.

Meanwhile, anyone who already owns a property must pay an extra 3% on any additional property they purchase.

This one isn’t quite as “hidden” since it comes out of the property price, but it’s too expensive not to mention!

As long as you need a mortgage to buy your property, you will generally need a deposit, which makes up at least 10% of the property’s value in most cases. And the higher the better for reducing interest rates.

Sometimes, it’s possible to get a deposit as low as 5%, or even 0%. These are less common than they were before the 2008 credit crunch, but a few lenders still offer dedicated programs to those who meet certain criteria.

For instance, some lenders offer mortgages designed to help renters get on the property ladder.

Even so, lower deposits will likely limit your options when it comes to accessing a mortgage – and they can also result in a higher interest rate.

Buying a house involves various contracts and legal documents, which a professional should handle to avoid issues. As a result, the legal fees involved in property purchase – known as conveyancing – are another major expense.

First, there are the fees the conveyancer charges for their time.

Then there’s the cost of the disbursements they need to carry out for your house purchase. This includes local searches and registering ownership with the Land Registry.

You can expect to pay at least £500 on conveyancing costs and another at least £750 for disbursements.

However, this can vary depending on:

• Your location
• Whether a property is freehold or leasehold (a leasehold property will typically have higher conveyancing costs)

There are also conveyancing fees involved in selling a house – so those selling one house and buying another will likely have to pay more.

Those who can’t afford to buy a property in cash and need to borrow money instead face another cost – mortgage fees.

This includes:

• Mortgage broker fees: Mortgage brokers can charge up to 1% of the mortgage value, although others don’t charge any fees.
• Mortgage valuation fees: The cost of mortgage lenders valuing your property to determine how much they should lend you. This is sometimes included in other fees, but other times it’s a separate fee of up to £300.
• Mortgage arrangement fees: The fee a mortgage lender charges to help you find the best mortgage possible. You can pay it either upfront or add it to the mortgage, and it can cost up to £1,500.

If you currently have a mortgage and want to port it when you move somewhere else, you may be able to save on the arrangement fee. However, you would still have to pay a mortgage valuation fee and mortgage broker fee (if applicable).

Also, the amount you could save by securing a more favourable loan term could outweigh the costs you’d pay on arranging another mortgage.

Buying a house is risky business – if you move in and discover shortly after that the property has major structural issues that will cost tens of thousands to fix, you may find yourself wishing that you’d never bought the house at all (or at least paid less for it).

One of the best ways to mitigate this risk is to opt for a house survey – but as with anything, it comes at a cost!

The cost you can expect from these surveys depends on what you opt for:

• RICS Level 1 Home Survey: Up to £900
• RICS Level 2 Home Survey: Up to £1,000
• RICS Level 3 Home Survey: Up to £1,500

Older, larger, or more complex properties require more comprehensive home surveys than standard homes.

If your home survey reveals unexpected issues, you can use this as an opportunity to negotiate a lower purchase price. Of course, you may also choose to walk away.

Those buying new homes often opt for a snagging survey. These are cheaper (around £300) and focus on finding small defects such as cosmetic issues, although they may also identify more serious problems. It can help to have a Pre-Completion Inspection first, but this isn’t strictly necessary.

Removals aren’t technically a mandatory cost of buying a home, so they’re easily forgotten about. But very few people can move their furniture and belongings without some third-party help, which becomes an extra cost for purchasing a house.

The cost of this can vary widely depending on how far you’re moving and how much stuff you have to take – it can range from £500 for a short move with a modest amount of stuff for thousands for travelling across the country from one large home to another.

If you contact a removal company, they will give you a quote tailored to your situation.

There are also a few types of insurance you need to take out when buying a home.

Life insurance is increasingly mandatory when taking out a mortgage. By taking out a life insurance policy, you can ensure that the insurance company will cover the cost of the mortgage payments should anything happen to you. This generally costs around £20 a month.

Then there’s building and contents insurance, which protects the items in your home and its construction in the case of damage and theft.

Life, contents, and buildings insurance are all ongoing costs.

Finally, home buyer protection insurance allows you to claim back some of the costs involved in buying a house – such as the mortgage arrangement fee, the costs of legal processes, and local authority searches. This is fairly affordable, generally costing under £100.

Most mortgage brokers charge a money transfer fee (also known as a CHAPS fee or telegraphic transfer fee) to transfer money to the solicitor. This generally costs up to £50.

Most people want to decorate their house or buy new furniture after moving in.

This is especially expensive for first-time buyers, as they will likely need to buy everything from scratch. But even for those who already have a fully kitted-out home, there’s generally a need to repaint a couple of rooms or buy a few extra items such as curtains, carpets, or lampshades.

All this can add up.