Hidden Costs of Buying a Property: What You Need to Budget For

Purchasing a home is an exciting journey, but knowing the various costs beyond the purchase price is essential. At Yasmeen Residential, we aim to guide you through these often-overlooked expenses to ensure a smooth and informed buying experience.

Many buyers focus solely on the purchase price, but there are hidden costs of buying a property that can add thousands of pounds to your budget. Understanding these additional expenses is crucial whether you’re exploring properties to buy in Central London or looking elsewhere. From Stamp Duty Land Tax (SDLT) to legal fees, mortgage charges, surveys, and moving expenses, knowing what to expect can help you avoid unpleasant surprises and budget more effectively.

Table of Contents

Stamp Duty Land Tax (SDLT)

One of the most significant upfront costs is the Stamp Duty Land Tax (SDLT), a tax on property purchases in England. The amount you pay depends on the property price and your status as a buyer.

Current SDLT Rates (until the end of March 2025):

Up to £250,000 – 0%
£250,001 to £925,000 – 5%
£925,001 to £1.5 million – 10%
Over £1.5 million – 12%

First-time buyers currently pay no SDLT on properties up to £425,000, but this will change from April 2025, when the tax-free threshold will drop to £300,000. If you plan to buy, consider these changes when working out your budget.

Legal Fees

Buying a property involves legal processes that require a licensed conveyancer or solicitor. Their role includes:

Conducting local authority searches to check for planning restrictions or environmental concerns.
Drafting and reviewing contracts to ensure all legal aspects are in place.
Facilitating the transfer of ownership and registering your property with the Land Registry.

Cost Estimate: Legal fees typically range between £850 and £1,500, but extra charges may apply depending on your property’s complexity. It’s always wise to obtain multiple quotes to find the best deal.

Survey Costs

Before committing to a new home, assessing its structural condition is crucial. A professional home inspection can help you avoid unexpected repair costs.

Types of Surveys & Estimated Costs:

RICS Home Survey Level 1 (formerly Condition Report) – A basic property condition overview. (£300 – £900)
RICS Home Survey Level 2 (formerly Homebuyer Report) – A more detailed inspection highlighting potential issues. (£400 – £1,000)
RICS Home Survey Level 3 (formerly Building Survey) – A comprehensive assessment ideal for older, larger, or unique properties. (£630 – £1,500+)

Investing in the proper survey can save you a great deal in future repairs.

Mortgage Fees

Getting a mortgage involves several different costs, including:

Arrangement Fee – Charged by lenders for setting up the mortgage (£500 – £2,000).
Booking Fee – A reservation fee for securing a mortgage deal (£99 – £250).
Mortgage Valuation – Covers the lender’s assessment of the property’s market value (£150 – £1,500).

Some lenders offer mortgages with low or no fees, so shopping around can help you save money.

Moving Expenses

The process of moving can be costly. Expenses may include:

Removal company fees (£300 – £1,500, depending on distance and volume).
Packing materials – Boxes, tape, and bubble wrap.
Temporary storage – If your move is delayed, you may need to pay for storage facilities.

Planning can reduce stress and unnecessary costs.

Utilities and Council Tax

Once you’ve moved in, setting up essential services is crucial. You’ll need to budget for:

Electricity, gas, and water bills.
Broadband and phone line installation.
Council tax – The cost varies depending on the property’s valuation band.

Checking these additional costs before purchasing ensures they fit within your monthly mortgage payment plan.

Maintenance and Repairs

Owning a home means ongoing costs for maintenance and repairs. Common expenses include:

Boiler servicing (£120, depending on location and provider).
Roof repairs (a few hundred pounds to thousands).
General upkeep (painting, plumbing, garden maintenance).

Setting aside a contingency fund of 5-10% of the purchase price helps manage these costs.

Ground Rent and Service Charges (For Leasehold Properties)

If you’re buying a leasehold property, you may need to pay:

Ground Rent – A yearly payment made to the freeholder.
Service Charges – Covers maintenance of communal areas and facilities.

These fees vary widely, from £50 to several hundred pounds per month, so checking the lease agreement is essential.

Other Unexpected Costs

Deposit

The house deposit is a significant upfront cost, usually 5% to 20% of the property price. Having enough savings for this is crucial before beginning the home-buying process.

Broker Fees

If using a mortgage broker, they may charge:

A flat fee
A percentage of the loan amount

Some brokers offer free services, so it’s worth comparing options.

Moving-In Costs

Budget for furnishing, decorating, and minor repairs upon moving in. Some buyers may also need to upgrade appliances or install new fixtures.

Property Tax

Property tax obligations may vary depending on location. Checking with your local authority can help you budget accurately.

Final Budgeting Tips

Planning and accounting for all potential costs is essential to stay in control of your finances when buying a home. Research additional expenses such as legal fees, surveys, and moving costs to ensure they fit within your budget. Comparing multiple quotes for solicitors, surveyors, and removal services can help you save money.

Be mindful of Stamp Duty Land Tax (SDLT) changes and factor them into your financial planning. Additionally, setting aside a contingency fund of at least 5-10% of your budget can protect you from unexpected expenses, such as urgent repairs or additional legal costs. If purchasing a leasehold property, carefully review ground rent and service charges.

Long-term expenses, including council tax and maintenance, should also be considered. Seeking advice from estate agents in Central London can provide valuable insights, ensuring a smooth and well-informed home-buying process.

Do Read: Tineco vs Dyson vs Shark vs A30S: Which Is the Best Vacuum for Pet Hair in the UK?