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Nearly quarter of first-time buyers unaware they have to pay stamp duty

Nick Cheek
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Nick Cheek

Around 24% of UK first-time buyers didn’t realise that they may have to pay stamp duty before buying their first property, research has found.

According to research from The Mortgage Lender (TML), which surveyed around 2,005 people, around 21% of people had not factored stamp duty into their budgets.

Nearly 37% said they were not aware of indemnity insurance and land transaction tax in Scotland respectively. The report said 28% had factored in indemnity insurance and 20% had accounted for land transaction tax in their budgets.

Just over a third of homeowners were unaware of electronic transfer fee and mortgage advice fees respectively. Around 30% had accounted for electronic transfer fees in financial planning but only 23% had included mortgage advice fees.

Nearly a quarter of those surveyed were not aware of having to pay for a homebuyer survey, land transaction tax in Wales, valuation fee and mortgage product fees respectively.

Under a third in all these categories had accounted for these costs in their planning.

The report said that 14% of those who did not factor in additional costs said they had had to put their homeownership plans on hold while they “reassessed their budgets”.

Another 14% said they borrowed money from parents and grandparents to cover extra costs and 11% took out a loan.

Another 11% said they opted for a cheaper property and 7% stopped their property search completely as affordability was too stretched.

‘A clear knowledge gap’

Steve Griffiths, chief commercial officer at TML comments “Buying your first property is a big life milestone as well as a huge financial commitment. In addition to securing a mortgage and getting a deposit ready, there are an array of other associated costs involved with getting on the property ladder.

“But all too often these are either forgotten about or not factored into budgets, meaning many are hit with a financial shock when presented with the additional fees and charges they need to pay.”

He added: “What is clear is that there is evidently a knowledge gap when it comes to what’s involved with buying a house, with many learning the hard way when they’re either on or have already been through the homebuying process.

“More than ever, this highlights the need for professional advice. Brokers are not only expertly equipped to support their clients in getting the best mortgage deal for them, but can also ensure that buyers are well prepared in knowing what their affordability is and understanding what other costs may come their way.”