Half of first time buyers in the UK are not budgeting enough for the cost of buying their first home, with cost of surveys, valuations and legal fees some 73% more than anticipated, new research has found.
The survey undertaken by home builder Barratt Homes, shows that in the last five years over half of first time buyers are spending nearly £5,000 on the fees and costs involved in buying their first home.
The £4,955 figure comes in at more than £2,000 over an average budget of £2,865 for first time buyers, which only 28% of buyers claim to meet.
‘We carried out this research to identify how first time buyers could benefit from more accessible advice and knowledge. To those looking to buy their first home, £2,000 can be a large amount of money,’ said a Barratt spokesperson.
Of those affecting buyers, valuation fees, survey fees and arrangement fees were the costs most often forgotten about by first time buyers, with 18% of respondents admitting to having been unaware of each.
Stamp duty and broker fees were amongst the most commonly undervalued costs. Stamp duty was found to be almost £700 more than expected, while broker fees were more than £630 extra. Overall, first time buyers were found to be undervaluing specific costs by an average of £605.
In the past five years, over 30% of first time buyers have looked to the Bank of Mum and Dad to cover these additional costs, but that has grown from 24% five years ago to 40% of buyers in the last year.
For some, budgeting for fees isn’t proving an issue as one in five are actually saving money, budgeting more than they need by an average of just over £1,200. This is in line with the sense that some first time buyers can afford the extra costs, but lack the knowledge of where their money is most needed.
Over the five year period, 59% have used existing savings to cover these additional costs, indicative of a first time buyer with available savings, but without an understanding of what they need to cover.
‘The results of this research clearly show buyers are struggling to understand not only how much they need to budget, but also what that budget should be covering. However, where people are able to seek out and receive expert advice, not only are their budgets helping them plan better, but almost a quarter of people are making substantial savings as a result,’ the spokesman explained.
In hindsight, more than 55% said they would definitely have benefitted from additional advice related to the costs. Had they known the exact fees upfront, 47% said they would’ve saved more, while 19% would’ve purchased a smaller or newer home, which typically attract lesser costs.
