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First-time Buyer

The hidden costs of buying your first home: what to watch out for

Paloma Kubiak
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Paloma Kubiak

First-time buyers are “failing to count the cost of home-ownership” as they fork out nearly £2,000 in unexpected fees when purchasing a property.

A study of 10,000 people in the UK found that 41% of new homeowners didn’t account for unexpected fees, such as CHAPS bank transfer fees, search fees and excessive solicitor fees.

One in four homeowners were caught off guard by the charges, the study found, and 24% of those surveyed said they weren’t aware of land registry fees. Some17% didn’t know they had to pay stamp duty.

Based on the average UK house price, which stands at £221,000, according to Zoopla, first time buyers can expect to pay £135 or £270 (depending on the property type) for land registry fees, approximately £20 (depending who you bank with) for CHAPS and £1,920 in stamp duty.

Shock with post-purchase fees

The study by Pegasus Personal Finance also found that post-purchase fees hit new homeowners hard.

One in five didn’t account for an increase in utility bills as a result of moving to a larger property, while the same number were surprised to see their car insurance costs increase.

The study also showed a lack of knowledge surrounding interest rates and the impact they can have on the combined cost of a mortgage.

It found that 14% of homeowners – assumed to be those with variable rate mortgages – admitted they haven’t prepared for an increase in interest rates, should they unexpectedly climb from a seven year low of 0.5%.

Housing renovations and repairs

A quarter of all hidden costs were due to housing renovations or repairs, such as installing a new heating system or tackling damp.

But 25% of participants underestimated removal charges, while 14% of those surveyed viewed furniture and decor as a surprise expense.

Do your research

Jonathan Le Roux, co-founder and director of Pegasus Personal Finance, said: “The results of this study showed some real eye opening insights and surprisingly displayed a lack of thorough understanding when it comes to the cost of buying a property.

“When buyers are working out their budget for a future home move, forgetting the significant costs associated with stamp duty, solicitors’ fees or similar can really put a spanner in the works at the last minute.

“Our advice is to do your research and carefully list all the associated costs so you go into home ownership with your eyes wide open.”