In the UK, moving house is the greatest expense faced by most people in their lifetime. The principal costs are Stamp Duty Land Tax, estate agent fees, legal fees (conveyancing), mortgage arrangement fees (where applicable), surveys and removals. Some have argued that the costs of moving depress house sales.
Stamp Duty Land Tax
Stamp Duty Land Tax is payable by the buyer of a property as a percentage of the purchase price. Prior to December 2014 above certain thresholds it increases on the whole purchase price so that, for instance, the tax on a purchase of £250,001 is 3% (£7500.03) but the tax on a purchase of £250,000 is 1% (£2500). For the tax year 2012/2013, SDLT is as follows:
It has been said that SDLT distorts or depresses the housing market due the sharp increases above certain thresholds (sometimes known as the "slab" system). Campaigners like the Taxpayers Alliance and Stamp Duty Reform UK, argue for a progressive tax based on incremental tax bands.
With the UK average house price forecast to exceed £250,000 in 2014, the average Stamp Duty Land Tax payable will be in excess of £7,500.
From the 4th December 2014 Stamp Duty was changed to a graduated system which eliminates the big jumps in stamp duty at the threshold values. For instance a property of £600,000 under the old system would pay 4% tax of the whole asking price i.e. £24,000. Under the new system no tax is paid on the first £125,000, the next £125-250,000 is charged at 2% i.e. £2500 plus the portion (£350,000) in the £250,000-£925,000 tax band at 5% i.e. £17,500. This gives a total tax of £20,000. This change was said to be beneficial to 98% of property purchases.
Estate agent fees
In 2011, Which? magazine found the national average estate agents fees to be 1.8%, although fees vary widely.
Survey
There are four main types of survey: a valuation survey, a condition report, a homebuyer report and a full structural survey. Costs are likely to range from around £100 to £1000. Expensive or very large properties may cost even more.
Legal fees
Legal (conveyancing) fees vary greatly in the UK according to the value of the property and the service provided with one report finding that they range from £250 to £1300. Costs are also increased if someone is both buying and selling.
Mortgage arrangement fees
In April 2013, The Daily Telegraph reported that research by Moneyfacts showed the average mortgage arrangement fee to be £1522.
Removal costs
These will vary considerably subject to quantity of furniture/possessions and distance to travel. They are likely to range from £500 for a short distance move for a two-bed house, to several thousand pounds for a long distance move for a large house.
See also
- Real estate transaction
References
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