Buying or selling a property - beware the hidden costs

Buying or selling – are there hidden costs?

Everyone knows that buying a property is an expensive time but what is often forgotten is that it isn’t just the deposit, the professionals’ fees and the money for new furniture that you need to pay for but also the additional, hidden costs, that you may never have been expecting.

At Fieldings Porter, we set out what these are likely to be right at the start of your transactions, listing them in our Engagement Letters and telling you them in our initial call to you. Often, however, we find that these hidden costs, or disbursements as they are known, come as a shock to many who were simply unaware that they would need to fork out for these.

Below, you will find the main disbursements listed. Please be aware that this is not a complete list as every transaction is different and these do therefore change from time to time:

Searches:

It is our strongest advice, and the recommendation of any lender, that when purchasing a property you undertake a full set of searches. These include the following five searches and generally total approximately £250.00

1. Chancel Check
2. Local Search
3. Drainage and Water Search
4. Environmental Report
5. Coal and Mining Search

These searches will reveal if there are any significant issues with the property. Dependent on the results of the searches, we may recommend that you undertake indemnity insurance however your advisor would discuss this with you if this was the case and would also be able to discuss with you the purpose of each search at any time.

We require the monies for these searches at the start of the transaction and before we request them from the search provider.

Land Registry Fees

Following completion, your purchase will have to be registered with HM Land Registry, which charges a fee for providing this service.

The Land Registry’s fees for registering property transfers is based on a sliding scale, beginning at £20.00 for transaction under £80,000 and increases gradually until purchases of over £1,000,000 which require a fee of £455.00

The fee which will be incurred for your registration will be set out in your completion statement, which is provided to you well in advance of your completion date. This money will be required in advance and will also be listed as a disbursement on your final invoice, for your own records.

Stamp Duty

Not everybody has to pay Stamp Duty, and the amount payable is dependent on the purchase price of the property.

Provided that you only own one residential property at the point of completion, you will only have to pay Stamp Duty Land Tax (“SDLT”) if your purchase is over £125,000. If you do already own another residential property, then SDLT will be payable if the property is worth over £40,000 and the rate you pay will be 3% higher than the standard rate.

The normal SDLT rates begin at 2% for properties over £125,000, increasing to 5% once the value is over £250,000 and then 10% once the purchase price is more than £925,000.

What this means is that if you were buying a home for £325,000 you would pay SDLT at 2% for the amount between £125,001 to £250,000 and then 5% from £250,001 to £325,000. This would mean that a total of £6,250 would be payable for SDLT.

Again, this amount would be listed in your completion statement. SDLT can be paid up to 30 days after completion. If it is not paid in this time, you will incur penalties as a result. We therefore always require the money on account before completion so that we can ensure it is paid in a timely manner.

If you have any queries or would like any more information about the disbursements listed above, or about purchasing a property in general, then please do not hesitate to contact me or any member of our team.