The Hidden Costs of Buying a Property: What Should You Budget For?

You've saved your deposit.

You've worked out your monthly mortgage payments.

You've found a property within budget.

Sorted... right?

Unfortunately, buying a property comes with quite a few additional costs that are very easy to forget about when you're focused on saving for the deposit. Some are relatively small. Others can run into thousands of pounds. And there's nothing quite like reaching the point where your bank account is already crying and discovering another fee you hadn't budgeted for. So, if you're planning to buy a property, what else should you have on your radar?

Conveyancing Fees

We'll start with the obvious one.

You'll need a conveyancer to deal with the legal side of your purchase, and your quote will usually contain both legal fees and additional costs known as disbursements.

When comparing conveyancing quotes, don't just look at the headline legal fee.

Check exactly what is included.

Some firms may charge separately for additional elements of the transaction, such as acting for your mortgage lender, dealing with a leasehold property, completing the Stamp Duty Land Tax return, bank transfers, or other work.

A £100 cheaper quote isn't necessarily £100 cheaper by the time you reach completion.

Property Searches

Your conveyancer will usually carry out searches against the property you're purchasing.

These commonly include:

• A local authority search.

• A drainage and water search.

• An environmental search.

Depending on the property and its location, additional searches may also be recommended, such as mining, flood, or other location-specific searches. Searches are separate from your conveyancer's legal fee and should therefore be included when working out your overall buying costs.

Stamp Duty Land Tax

Stamp Duty Land Tax (SDLT) can be one of the largest additional costs of buying property in England. The amount payable depends on your individual circumstances, the purchase price, and the nature of the transaction.

Different rules can apply to first-time buyers, additional properties, companies, and certain other transactions.

It's worth finding out your likely SDLT liability before making an offer rather than discovering a rather unpleasant number further down the line.

Your Survey

As I've covered in another blog, a mortgage valuation is not the same thing as a survey.

A survey isn't legally required, but many buyers choose to have one carried out to understand the physical condition of the property before they exchange contracts.

The cost will depend on the type of survey and the property itself.

It can feel tempting to save the money, particularly when you're already paying for everything else, but discovering a significant defect after you've bought the property can be considerably more expensive.

Mortgage and Broker Fees

If you're buying with a mortgage, there may be additional costs associated with arranging the finance.

Depending on your lender and mortgage product, these could include:

• Mortgage arrangement or product fees.

• Valuation fees.

• Broker fees.

Some mortgage fees can be added to the loan, but remember that doing so may mean paying interest on them over the mortgage term.

Your mortgage broker should be able to explain the costs associated with the particular product you're considering.

Leasehold and Management Company Fees

Buying a leasehold property can come with some additional costs that buyers don't always expect. Depending on the lease and management arrangements, there may be fees associated with notices, deeds, certificates, management companies, or other post-completion requirements.

You should also consider the ongoing costs of ownership, particularly service charges and ground rent where applicable.

Your conveyancer should report to you on these before you become legally committed to the purchase.

Buildings Insurance

Buildings insurance is another cost buyers sometimes forget about until they're approaching exchange. If you're purchasing with a mortgage, your lender will usually require suitable buildings insurance to be in place.

For many freehold purchases, responsibility for insuring the property passes to the buyer from exchange of contracts rather than completion, although the position should always be checked for your particular transaction.

With leasehold properties, the building may instead be insured under a policy arranged by the freeholder or management company.

Moving Costs

You've completed.

You've got the keys.

Now you actually have to move everything.

Whether you're hiring a removal company, renting a van, paying for storage, or bribing friends and family with pizza, moving day comes with its own costs. If you're moving a significant distance or have a lot of belongings, it's worth getting removal quotes early.

And Then There Are the Little Things...

This is the category that destroys the "new house" budget.

Changing locks.

Redirecting your post.

Buying curtains because apparently none of your existing ones fit.

Broadband installation.

Furniture.

A suspicious number of trips to IKEA.

And the inevitable discovery that you suddenly need approximately 47 things from B&Q. Individually, these costs might not seem significant. Collectively, they can add up very quickly.

Don't Spend Every Penny on the Purchase

One of the best things buyers can do is leave themselves some breathing room.

If purchasing the property will leave you with virtually nothing remaining in savings, consider what would happen if you moved in and immediately discovered that the boiler needed replacing.

Properties cost money after you buy them too. Having an emergency fund available for repairs and unexpected expenses can make the first few months of homeownership considerably less stressful.

Frequently Asked Questions

How much should I budget on top of my house deposit?

There isn't one figure that will work for every buyer. Your additional costs will depend on the purchase price, mortgage arrangements, property type, SDLT position, survey requirements, legal fees, and moving costs.

Working these out individually before you start viewing properties will give you a much more realistic budget.

Are property searches included in conveyancing fees?

Usually, searches are treated as a separate cost rather than part of the conveyancer's legal fee. Your conveyancing quote should provide a breakdown of the anticipated legal fees and disbursements.

Do first-time buyers have to pay Stamp Duty?

It depends on the purchase price and whether the buyer meets the relevant eligibility requirements. SDLT rules and thresholds can change, so buyers should check the current position for their circumstances.

Are there extra costs when buying a leasehold property?

There can be. Leasehold purchases often involve additional legal work and may also involve management company, freeholder, notice, or compliance fees.

When should I work out the costs of buying a house?

Ideally, before you start seriously viewing properties.

Knowing your deposit is only half of the equation. Understanding your legal fees, SDLT, mortgage costs, survey costs, and moving expenses means you can work out what you can genuinely afford before making an offer.

Final Thoughts

The purchase price isn't the only price involved in buying a property. Between conveyancing fees, searches, Stamp Duty, mortgage costs, surveys, insurance, moving expenses, and everything you suddenly decide your new home desperately needs, the additional costs can quickly add up. The best approach is to budget for them from the beginning. That way, when you finally get the keys, you can concentrate on enjoying your new home rather than wondering where all your money disappeared to.

I provide clear conveyancing quotes so buyers understand the anticipated legal fees and costs involved from the outset. If you're planning a property purchase and would like to understand the conveyancing process and likely legal costs before making an offer, you're always welcome to get in touch.