Two thirds underestimate the extra costs of moving home in the UK
The majority of people moving home in the UK underestimate the costs involved and spend on average £9,472 on extras having only budgeted for £7,643, new research shows.
Overall two 65% of buyers have not estimated costs such as estate agent fees and conveyancing properly despite the fact that these are rising, up by 8% in the last year alone and up by 25% over the last decade.
But the research from Post Office Money does show that costs could have been much higher on average without the stamp duty changes announced in 2014 which brought them down by 13% for some buyers.
The removal of the stamp duty slab system which saw all home owners charged at a percentage of the price paid for their property, resulted in the average stamp duty bill falling from £4,227 at the end of 2014 to £1,774 at the end of 2016.
However, forecasts indicate the additional costs of moving will hit £12,267 by the end of 2020 and would be buyers will face an even greater challenge for the amount they need to set aside.
The study report says that moving costs present a challenge for prospective home buyers and movers with buyers needing to find £94,200 to pay for a deposit on the average home. While this has remained fairly consistent in recent years, over the last decade, the average deposit has increased by 36%. Deposit costs also remain high for first time buyers, who can expect to pay an average £50,136 on their deposit.
One of the most significant moving costs to increase over the past 10 years is the fee charged by surveyors. This cost has jumped by 53% since the end of 2006 from £498 to £764 in 2016.
Those hoping to move in the South East have been one of the hardest hit by increases, with additional costs rising by 72% in the last 10 years from £8,809 in 2006 to £15,114 in 2016.
But London remains the most expensive place to move home with an average cost of £26,673 and buyers in the city are the most likely to underestimate the additional costs, with prospective buyers budgeting £8,838, significantly less than the £26,673 they should expect to spend.
‘Forecasts indicate the cost of buying and moving will only continue to rise over the next five years, even with the impact of revised stamp duty rules introduced to reduce the impact on prospective buyers’ wallets,’ said Owen Woodley, managing director at Post Office Money.
‘With research indicating that 65% of these buyers have underestimated how much they should budget for these costs, careful and considered budgeting is essential at a time when they are already likely to be financially stretched,’ he explained.
‘We are aware of the barriers people can face when they are looking to purchase their first home or move further up the ladder. Planning ahead is vital and potential homebuyers should factor in these costs early on to avoid being faced with stressful, last minute bills,’ he added.