Taking the plunge to start looking for your own home or moving to another is one of the biggest decisions of your life - but the fees can be just as big and scary. A recent report by KPMG found that anyone buying a home needs an average income of £41,000 – double the UK average. The situation is predictably even worse in London, where a first-tie buyer needs £77,000 for a 10% deposit.
The worst thing about the whole process is that the deposit, and proof of a steady, sturdy income is the largest piece of the puzzle – but by no means the only one.
The numerous fees on a property imposed by the government are an additional burden; stamp duty, for example, can total thousands for homes of a certain value. Recent changes in the percentage paid - meaning that buyers only pay a percentage of any valuation above a certain threshold rather than a bulk amount - will help some but not others.
Then there are the estate agent’s fees for things you’ve never even considered or never even knew about until too late. Earlier this year the situation apparently became so bad that the Competition and Markets Authority wrote to several big name estate agents to tell them it suspected they, ‘had been involved in anti-competitive agreements’ by working together to avoid advertising fees.
Some of them go directly into the agent’s pockets, others pay for sometimes bizarre services. Have you ever heard of chancel repair liability, for example – an insurance against paying for certain repairs to the local parish church if it’s built before 1536? It’s not expensive at £50, but thoroughly annoying.
Surveys and valuations are expensive, from a few hundred pounds to thousands, depending on the level of valuation that you purchase. For buyers there may be arrangement fees, telegraphic transfer fees, mortgage indemnity (a form of insurance in the case of high LTV ratios), conveyancing, and brokerage.
The latter two are those to watch out for, as the bulk of the cost will be the percentage the agent takes of the sale, although these sums vary considerably. Expect to pay between 0.75% and 3.5%, although the average is 1.5% plus VAT.
The percentage will vary depending on the valuation of the house, with a lower percentage for higher-priced homes. It is worth comparing estate agents to make sure you aren't getting stung by high fees.
Online estate agents differ in that they have fewer overheads, meaning that a cheaper cost for sales can be passed on to customers in the form of a set fee. There’s also more scope for customisation, meaning that some of the fees can be dropped if you don’t need a particular service.
A valuation, for example, can be carried out remotely by the agent using a set of databases combing knowledge of the housing market in the area. You can sell a property with HouseSimple from as little as £95 plus VAT for a customisable service, up to £475 plus VAT for the full package, which will list the property on several hundred websites.
For the technologically literate in the 21st century there is little excuse for not cutting out extraneous costs when selling a home; it’s a faster and cheaper process, and cuts out many unnecessary fees.