With house prices currently increasing in the UK, buying a property is a major financial commitment to most, and likely the most expensive purchase we’ll make in our lives. However, the true cost of buying your first or even second home often extends far beyond the original purchase price, with many buyers focusing on deposits and mortgages without fully understanding the additional expenses involved. When we consider legal fees, Stamp Duty, and ongoing maintenance, these hidden costs can add thousands to the final bill and quite often lead to unexpected financial strain.
With recent changes set to take effect from April 2025, being aware of the extra expenses involved when buying property and allowing for them in your budget are more important than ever. Whether you’re a first-time buyer or a seasoned investor, being aware of changes and additional costs will help you budget more effectively. After all, no one wants a surprise bill they weren’t expecting.
In this guide, we’ll break down the key hidden costs of buying a property in the UK and will provide real-world insights to help you make a more informed decision.
Stamp Duty and Other Taxes
Stamp Duty & Land Tax (SDLT) is one of the biggest additional costs that buyers often forget about, and with upcoming changes scheduled for April 2025, it’s important to understand how these changes will affect you and potentially the price you can afford to buy at.
Currently, buyers don’t pay any Stamp Duty on properties under £250,000, but from 1st April 2025, this threshold is dropping back down to £125,000. That means many buyers will now face a tax bill they might not have expected, and for those purchasing second homes or for investment purposes, there’s also a new additional 3% surcharge to consider.
For example, anyone who previously owned property in the UK, purchasing a £300,000 home as their main residence before 1st April 2025, would hit you with a tax bill of £2,500 in Stamp Duty. After the new changes take effect, that doubles to a whopping £5,000. Quite the increase for already stretched home buyers. Investors and those buying second homes would see an even steeper increase in their final SDLT bill.
So, where do first time buyers fit into all this? The good news is, under the new rules, you’ll still be exempt from paying stamp duty up to £300,000, but that threshold has come down significantly from the current rate of £425,000. It is, however nice to see that there is still some relief for anyone looking to buy their first home.
Beyond SDLT, some investors may also need to factor in Capital Gains Tax (CGT) when selling a property, as well as Higher Rate SDLT for non-UK residents. This adds another 2% on top of standard rates, so it’s easy to see how the costs can quickly add up. Our advice. Understand the new rules and make sure you budget accordingly.
Conveyancing and Legal Fees
Unfortunately, the costs don’t stop there, and once you’ve found your dream home, the legal process of transferring ownership begins. This is known as conveyancing and is another area where buyers often hugely underestimate costs. Legal fees can vary significantly depending on a property's value and location, so it's important to know how this will affect you and your budget.
A conveyancer or solicitor will handle the legal work, which includes conducting property searches, reviewing contracts, and ensuring there are no legal issues with the purchase. The average cost of this service typically ranges from £1200 to £1500, but can often exceed £2000, depending on the property's purchase price and type. If you’re buying a flat for example, the property is likely to be leasehold so you can expect to pay a bit more due to the extra paperwork involved.
What’s Included in Legal Fees?
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Searches – Local authorities search for issues like planning restrictions or flood risks. The cost for this is between £250 and £500.
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Land Registry Fees – The charges for registering the property in your name range from £20 to £910 and largely depend on the final purchase price.
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Bank Transfer Fees – Mortgage lenders charge around £20 to £50 for transferring large sums.
It’s always worth shopping around for a solicitor or conveyancer, but bear in mind that the cheapest option isn’t always the best. A slow or inexperienced solicitor can heavily delay the process, which only leads to added stress and potential extra costs if deadlines are missed.
Mortgage-Related Costs
Getting a mortgage is a big step, but many buyers, especially those doing this for the first time, don’t realise just how many extra costs come with it. Beyond your monthly repayments, there could be several additional upfront charges, some of which are unavoidable.
Mortgage Arrangement Fees
Most lenders charge an arrangement fee for setting up the loan. This can range from £0 to £2,000 or be charged as a percentage of the mortgage amount, depending on the lender and mortgage type. Some buyers choose to add this fee to their mortgage, but this means paying interest on it over the entire term of the loan.
Valuation Fees
Before approving your mortgage, lenders will carry out a valuation survey to confirm the property’s value aligns with the purchase price. Some lenders offer this for free, but others charge anywhere from £150 to £1,500, depending on the property’s value.
Broker Fees
If you use a mortgage broker to find the best deal, they may charge a fixed fee (typically £300–£600) or take a commission from the lender. While some brokers work on a no-fee basis, it’s important to check how they’re paid to avoid unexpected costs or potentially being aligned with the wrong lender.
Survey and Inspection Fees
Before committing to a property, it’s essential that you check for potential issues that could lead to expensive repairs down the line, such as structural issues. Although this is an important step, many home buyers overlook it to save money. This can often be a costly mistake.
Types of Surveys:
- Mortgage Valuation (£150–£1,500) – This is carried out by the lender to confirm the property’s value but doesn’t highlight any potential defects.
- Homebuyer Report (£400–£1,000) – This is a mid-level survey that aims to identify visible issues like dampness or subsidence.
- Full Structural Survey (£600–£1,500) – This is essential for older properties and will contain a detailed report highlighting any major structural concerns.
Skipping a survey might save you money upfront, but it could cost thousands in repairs later down the line. Our advice is always to get your property checked, even it if looks in pristine condition. You never know what might be hiding under the surface.
Property Maintenance and Unexpected Repairs
Owning a home comes with many ongoing costs that some buyers don’t fully consider or understand. Even if a property looks perfect at first glance, unexpected issues can crop up which sometimes lead to hefty repair bills.
Common Hidden Costs:
- Roof repairs – Roofers don’t come cheap, and needing to replace damaged tiles or fix leaks will cost you anywhere from £500 to £5,000, depending on the extent of the damage.
- Damp treatment – Resolving damp, rising damp or mould issues can set you back £1,000–£5,000, but again, it depends on the extent of the problem.
- Boiler replacement – A new boiler costs somewhere between £2,000 and £4,500 and is an expense many buyers don’t plan for.
It’s important to remember that even newer homes require ongoing maintenance. While these might not be needed from the outset, remedial works such as repainting and plumbing repairs should be budgeted for, especially in the first year.
Moving Costs and Insurance
Moving house comes with extra expenses that can easily catch buyers off guard. Unless you plan to move all your belongings yourself, you’ll most likely want to hire a removal company. This can cost anywhere from £500 to £2,000 depending on the number of worldly possessions you have and the distance of the move. If you’re caught between gaps in the property chain, you may also need to consider temporary storage, which is another cost to factor in.
When it comes to home insurance, building insurance is often required by mortgage lenders, so that’s unavoidable. While most mortgage lenders will happily arrange this for you, however, if you choose to do it yourself, expect to pay a few hundred pounds a year. Contents insurance, on the other hand, is optional but worth considering to protect your personal belongings in the event of flooding, fire or theft.
While these costs may seem minor, they do tend to add up fast. Do your research, plan ahead and understand their importance before making an offer on a property.
Practical Tips for Budgeting
Buying a new home can be stressful, and with so many hidden costs involved, it’s understandable to feel a little overwhelmed. That’s why it’s always advisable to plan ahead. The best way to avoid financial surprises is to work out the total cost of buying. Not just the deposit and mortgage, but everything else in between, from Stamp Duty to conveyancing and moving fees.
A good rule of thumb is to have an emergency fund set aside for unexpected expenses, especially in the first year of homeownership. Comparing mortgage deals, getting fixed quotes for legal fees, and researching insurance costs in advance can also help you budget more accurately.
Keeping up to date with changing regulations like the new Stamp Duty rules, for example. This will ensure you’re financially prepared. The more informed you are, the fewer hiccups you might face during your buying journey.
Don’t panic. Just be aware
Buying a property comes with more costs than most expect, but with the right planning, they shouldn’t come as a shock. Knowing what to budget for means you can move forward with confidence and adjust your purchase price accordingly.
If you’re looking for expert guidance, Property Elevate is here to help. Get in touch today to make your property journey smoother, and for further advice and information, explore our education resources on our website for more insights into smart property investing.