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First-time Buyer

First-time buyers go £2,000 over-budget to cover fees

Paloma Kubiak
Written By:
Paloma Kubiak
Posted:
Updated:
14/07/2017

Half of first-time buyers are not budgeting enough to cover the fees and costs associated with getting on the property ladder.

The average first-time buyer budgets around £2,865 for homebuying fees but they’re actually spending closer to £4,955 to cover the costs.

This means the wannabe homeowners are spending 73% more than they planned – a hefty £2,000 more than budgeted.

Just 28% of those surveyed by Barratt Homes claimed to be able to meet the additional costs.

It found that valuation fees, survey fees and arrangement fees were the costs most often forgotten by first timers, with 18% of respondents admitting they were unaware of these extras.

Stamp Duty and broker fees were also underestimated. 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 an issue – one in five are actually saving money, budgeting more than they need by an average of just over £1,200.

The study of first-time buyers over the past five-years found that 59% have used existing savings to cover the additional costs, showing that they’re struggling to understand not only how much they need to budget, but also what the budget should be covering.

More than 55% said they would have benefitted from additional advice related to the costs. Had they known the exact fees upfront, 47% of buyers said they would have saved more, while 19% would have purchased a smaller or newer home, which typically attract fewer costs.