When scraping together to buy a home, it is all-too common to focus solely on the price of the flat or house you want. Unfortunately the extra costs do mount up, leaving many exasperated new owners wondering just where all the money goes.
When evaluating the affordability of a property, always make allowances for improvements or repairs, the cost of moving, and conveyancing fees. When instructing a conveyancer or conveyancing solicitor, make sure you get as full a quote as possible, and be sure you are as aware of every cost as possible.
The biggest chunk of the conveyancers quote will be Stamp Duty Land Tax, which the government levies on every property bought over the value of £125,000. In the budget last month, first-time buyers had their special allowance – which exempted them from the tax on properties up to £250,000 – removed while properties worth over £2,000,000 became liable to 7% SDLT, or 15% for overseas buyers.
The table below shows current SDLT liabilities, and so long as whoever is quoting to do your conveyancing work know the value of the property you are buying or intend to buy, they should be able to give you a very good estimate of this figure.
|Up to £125,000||0%|
|£125,001 – £250,000||1%|
|£250,001 – £500,000||3%|
|£500,001 – £1,000,000||4%|
|£1,000,001 – £2,000,000||5%|
|£2,000,001 and above||7%|
So if you are buying a property worth £250,000, £2,500 of your extra costs will go straight to the government in the shape of SDLT. In addition there will also be the fees levied by another government body – the Land Registry – for registering your purchase. Again this figure is simple to estimate accurately,
Other expenses you will face are any costs related to the mortgage lender advancing you the agreed loan amount to finance the purchase, any survey costs they insist upon and the various charges conveyancers and conveyancing solicitors incur in carrying out their searches.
The professional that is dealing with your conveyancing will deal with transferring all these sums and could well include them in their quote – it is always worth asking for a thorough quote and taking time to go through it with them, it gives you a good idea of their communication skills and whether you will have a good working relationship as much as anything.
Then they have to take their fee for doing the job itself – factoring in their overheads and, of course, some profit to make it worthwhile. It will be no consolation to you as you feel the hole left in your bank balance and wilt at the scale of the task of doing up and moving into your new pad, but the amount of your conveyancing fees that your conveyancer actually gets to keep is smaller than you would originally think.