And while the stamp duty holiday may be a great opportunity to save money, it can be easy to overlook some of the other expenses involved in purchasing a home. But what is the true cost of moving out?
Know Your Money has spoken to a number of industry experts to reveal their top tips on what financial pitfalls to be aware of when you’re planning to move for both buyers and renters.
For buyers - Understand the mortgage landscape
The government has raised the stamp duty threshold to £500,000 until March 31st 2021, which is helping many buyers save some money on their property purchase.
However, Curetons, London-based property buying agent, reiterates the fact that although you may not have to currently worry about stamp duty, there are other financial impacts to consider.
They advise: “The stamp duty holiday is tempered with the fact that because of the economic issues caused by COVID-19 the range of mortgages on offer to buyers has dramatically decreased. A lot of the best deals have been removed and lenders are demanding much bigger deposits and decreasing the salary multiples they will lend on. We’d always advise getting a written mortgage offer in place before you start your property search.”
As a buyer, having a Decision in Principle in place ahead of looking at properties, shows estate agents you are serious and are able to afford the property, which can help if there is a lot of competition for a particular property.
Paul Keighley, residential partner at Bramleys adds: “It’s important to research different mortgage opportunities to find the best deal for you. Although an additional cost, using a mortgage broker takes away the hard work of finding the best offer for you and can often get you a better rate than going directly to the lender.
“Although it’s important to understand the landscape and what that means in terms of your deposit amount, a mortgage broker can offer expertise and ensure you’ve definitely got the best possible deal.”
For buyers - Be aware of additional costs and fees
For buyers, it’s crucial to be aware of extra costs that can happen during the process of buying a house. These include solicitor’s fees to carry out all required legal work, which typically range between £800-£1,500, as well as local searches to determine if there are any local issues or plans to be aware of, averaging between £200-£300. Another fee to consider is the land registry fee, to transfer the buyer’s name onto the property. The cost for this is determined by the value of the property.
Lastly, many lenders charge a product or completion fee for their mortgage, which is usually between £1,000-£1,500. However, many lenders offer the option of adding this fee to your overall mortgage payment, which may be of interest to buyers who want to avoid having to pay another large sum on completion.
It is also important to be aware that many of these fees, for example, solicitor or searches, are non-refundable, even if the purchase ends up falling through. Therefore it is crucial to be fully aware of all the costs involved before starting the process of buying a home.
For renters and buyers - Plan ahead to avoid any unexpected costs
Make sure you are aware of all potential costs that can arise during the move out process, as being faced with an unexpected situation that you didn’t budget for can result in you having to dip into your savings.
Vicki Wusche, speaker and author comments: “Before you move into your rented accommodation, have a visit and check everything works i.e. the fridge and freezer, the washing machine, etc, check the taps work and don’t leak, check the toilet and the shower – this way you can make a list for the letting agent before you move in.”
Pete-Reis Campbell, a first-time buyer, offers similar advice: “I think the main one is there is a lot of information that the “property report” won’t reveal - for example, the state of the boiler, electrics, and windows. You should have an electrician and plumber visit the property before purchasing to identify any hidden repair/upgrade work needed, to avoid ending up like me and never being able to use the kettle & shower at the same time!”
For renters - Ensure you have the correct paperwork in place
Although you’re excited about the prospect of moving in, it’s also worth protecting yourself for when you want to move out so you’re not having to pay additional cash. When you do move out, you can also refer to your paperwork to settle any disputes.
Helen Hollingsworth, lettings partner at Bramleys, continues: “It is crucial when signing any paperwork that you have checked all the major areas. Is the property safe? Have you been provided with the gas safety certificate and a copy of the electrical installation report before you move in, plus the EPC for the property and the How to Rent Guide? Make sure you’re happy with the condition of the property. It is crucial that you check the inventory to confirm it is a true reflection of condition, as this will help avoid potential deposit disputes when you leave. “
“Finally, make sure you know the notice period you need to give to end your tenancy and that any deposit paid over has been protected under the required schemes. You can’t generally (unless there are exceptional circumstances) give notice to end the tenancy until the expiry of the fixed term period, and if you leave before this, you would have to keep paying the rent - even after you’ve moved out. Once on a periodic tenancy, there is a degree of flexibility but check your agreement carefully beforehand.”
For renters - Understand what is required of you when moving out of rented accommodation
There are additional costs to consider when you’re moving out from a rented property, and Vicki Marsch highlights some key aspects to take into account:
1. Give the required notice in a timely fashion – avoid having to pay rent after the date you want to leave by getting this right.
2. Check the requirements for clearing and cleaning the property – do you need to get it professionally cleaned? Do you need to clean the carpets? Getting this right will save charges and help you get all your deposit back.
3. Meter readings – make sure you keep a copy and contact the utility suppliers so you don’t get charged for power you have not used.
For renters - Don’t be duped by letting agent fees.
Helen Hollingsworth offers her number one tip for those moving into rented accommodation: “One of my main top tips for first-time renters when moving out would be, don’t be duped by letting agents' fees.
"Tenancy related fees covering assured short-hold tenancies, student lettings and lodgers living with a private landlord were banned back in June 2019. You shouldn’t be asked to pay for things such as credit checks or references when agreeing on a new tenancy nor any administration costs relating to drawing up the tenancy agreement, a moving in fee or payment for immigration checks.”
For renters & buyers - Don’t forget about furnishings
It’s easy to get swept up in ensuring you have saved enough money for a deposit and any associated fees, that you may actually forget to consider what you’re moving in to. Making a place feel like home takes money and it can be easy to get carried away, however, there are ways to be more sensible and save a few pounds.
Vicki Wusche shares a few top tips:
1. If you’re buying from Amazon always check the direct seller as well as Amazon’s cost as you may find one is cheaper than the other
2. Facebook marketplace - your local area will have a marketplace site - put up your request and look at the for sale ads. Also, check sites like Gumtree and Freecycle
3. Charity shops are always a good source of clean second-hand goods - they won’t do electrical stuff but it’s worth a check
4. Ask family and friends - when I left my married home with 2 kids everything I had was a gift from someone from their spare pans to furniture from the charity store.
8. For renters and buyers - Make sure you have budgeted correctly once the move-in process is complete
Although not a cost directly associated with the moving out process, if this is your first property or rental, it’s likely that you are not used to the direct debits that will start coming out of your account each month.
Vicki Wusche adds: “Before you commit to moving, have a clear budget – so many people I work with don’t know or under-estimate their cost of living. Make sure you’re aware of the maximum you need every month to cover your essential bills, then you can work out the cost of the non-essentials and luxuries.”
Although moving out is exciting, it can also be very tiring, and making sure you’re aware of all the costs involved and budgeting efficiently can help alleviate some of the stress of this process. Make sure you save as much and for as long as possible so you don’t have to worry about the costs and can focus on the excitement.
