The Hidden Costs of Buying a House in the UK, and When You Pay Each One

The hidden costs of buying a house in the UK are the bills on top of the price: stamp duty, your solicitor's fee and disbursements, including searches and the Land Registry fee, a survey, mortgage fees, buildings insurance and removals. Flats add service charges and ground rent. Most fall due at exchange or completion.

None of these is really hidden, and all of them belong in your budget from day one. They are just easy to forget when every conversation is about the price. Here is each one, what it is for, and when you pay it. Figures are for England.

The costs at a glance

• Stamp duty, if the price is over the threshold. Due at completion.
• Legal fee and disbursements, including searches and the Land Registry fee. Searches up front, the rest at completion.
• Survey. Paid to the surveyor, usually soon after your offer is accepted.
• Mortgage fees, if you borrow. Ask your lender and broker when each is due.
• Buildings insurance, in place from exchange.
• Removals. Paid to the removal firm around moving day.
• Leasehold costs for most flats: service charge, reserve fund and any ground rent, from completion.
• Running costs from the day you move in: council tax, heating, water and broadband.

Stamp duty

Stamp Duty Land Tax is usually the biggest cost after the deposit. You pay each rate only on the part of the price inside its band. For a home you will live in, if you are not a first-time buyer:

• Up to £125,000: nothing
• £125,001 to £250,000: 2%
• £250,001 to £925,000: 5%
• £925,001 to £1.5 million: 10%
• Above £1.5 million: 12%

On a £350,000 home that comes to £7,500.

First-time buyers pay nothing up to £300,000 and 5% on the part from £300,001 to £500,000. On the same £350,000 home, a first-time buyer pays £2,500. Above £500,000 the relief is lost completely.

Buying a second home or buy-to-let usually adds 5% on top of every band. Buyers who are not UK resident usually pay a further 2% surcharge.

When you pay it: your solicitor normally files the return and pays the tax on the day of completion, from money you send them beforehand. The legal deadline is 14 days after completion. Stamp duty applies in England and Northern Ireland. Scotland and Wales have their own taxes.

Our guide to stamp duty: what you'll actually pay has more worked examples, including the £500,000 cliff edge for first-time buyers.

Legal fees and disbursements

Your solicitor's bill has two parts.

The legal fee is for the work itself: checking the title, reviewing the searches and the contract, dealing with your lender, exchange, completion and registration. We give you a written fixed quote before work starts, so you know the figure in advance.

Disbursements are costs your solicitor pays to other people on your behalf. On a typical purchase they are:

• Searches. The local authority search covers planning and building control. The drainage and water search shows how the property connects to the mains. The environmental search covers flood risk, contamination and ground stability. Some areas call for more, such as a coal mining search.
• The Land Registry fee for registering you as the owner.
• Bankruptcy and priority searches.
• Bank transfer fees for sending the money on completion.
• Leasehold fees, for flats: some leases require notice of your purchase or mortgage to be given to the landlord, who charges for registering it.

The Land Registry fee

HM Land Registry sets this fee on the price. For an application made online through HM Land Registry's portal, it is:

• Up to £80,000: £20
• £80,001 to £100,000: £40
• £100,001 to £200,000: £100
• £200,001 to £500,000: £150
• £500,001 to £1 million: £295
• Over £1 million: £500

There is no separate fee for registering your mortgage when it goes in with the transfer.

Survey

Your lender will value the property, but that valuation is for the lender. It is not a survey, and it does not protect you if something is wrong with the home.

A survey is a detailed inspection of the property's condition. RICS, the surveyors' professional body, sets three levels of home survey. Level 1 is the lightest and Level 3 the most detailed. Ask the surveyor which suits the property, and what each level covers. You pay the surveyor directly.

Some buyers book a survey as soon as their offer is accepted. Others wait until the lender's valuation confirms what it will lend. Either way, have it done before exchange.

Mortgage fees

Lenders and brokers charge in different ways. Depending on the deal, you might pay:

• a product or arrangement fee to the lender
• a valuation fee to the lender
• a broker fee, if your broker charges one

A cheaper rate with a large fee can cost more overall than a higher rate with none. Before you apply, ask your lender and broker for every fee in writing, and when each is due.

Buildings insurance

From exchange of contracts you are legally responsible for the property, so buildings insurance needs to be in place by then, not from moving day.

If you are buying a flat, the landlord usually insures the building and recovers the cost through the service charge. You will still want your own contents insurance.

Leasehold costs

Buying a flat usually means buying a lease, and that brings costs of its own.

• Service charge. Your share of running and repairing the building: cleaning, lighting, the lifts, insurance, management. The lease sets out what can be charged.
• Reserve fund. Many buildings collect money towards future major works. You will not usually get it back when you sell.
• Major works. For bigger jobs the landlord must consult leaseholders if any one leaseholder's share will be more than £250. Planned works can mean a large bill on top of the usual service charge.
• Ground rent. Most new long leases granted from 30 June 2022 can charge no more than a peppercorn, which in practice means nothing. Older leases may charge ground rent, and some have terms that let it rise.

Your solicitor gets the landlord's or managing agent's information, often on a form called the LPE1, and reports what you will pay, any planned works and the size of the reserve fund before you commit.

Estate agents, removals and running costs

Estate agents. Buyers do not normally pay the seller's estate agent: the seller pays, usually on completion. The exception is a sale by tender, where the buyer may agree to pay the agent's fee. If an agent recommends a solicitor or broker, they must tell you up front about any referral fee they will receive.

Removals. Book early and get more than one quote. Your moving date is fixed only at exchange, so check how the firm handles short notice.

Running costs. From the day you move in: council tax, heating, water and broadband. If you have a mortgage, some buyers also take out life insurance at the same time.

When each cost is paid

1. When you apply for a mortgage: any broker fee and lender fees, depending on the deal.
2. After your offer is accepted: the searches, usually paid to your solicitor up front, and the survey, paid to the surveyor.
3. At exchange: the deposit, paid through your solicitor. Buildings insurance must be in place.
4. At completion: the rest of the price, plus the stamp duty and the remaining legal fee and disbursements, including the Land Registry fee. Your solicitor sends a completion statement beforehand showing exactly how much to send.
5. On and after moving day: removals, then council tax, bills and, for a flat, the service charge and any ground rent.

Questions people ask

What are the hidden costs when buying a house in the UK?

Stamp duty, your solicitor's fee and disbursements such as searches and the Land Registry fee, a survey, mortgage fees, buildings insurance from exchange, and removals. Flats add a service charge, a reserve fund and sometimes ground rent. Once you move in there is council tax and the bills. Most of the big items fall due at completion.

When do you pay stamp duty and solicitor's fees?

Searches are usually paid up front. The rest of the legal fee and the disbursements are normally paid at completion, with the money shown on your completion statement. Stamp duty is paid then too: your solicitor usually files the return and pays the tax on completion day. The legal deadline is 14 days after completion.

How much is the Land Registry fee when buying a house?

HM Land Registry sets it on the price. For an online application it runs from £20 for a property up to £80,000 to £500 over £1 million. A home costing £200,001 to £500,000 costs £150 to register. There is no extra fee for registering your mortgage alongside the transfer.

Do buyers pay estate agent fees in the UK?

Not normally. The seller pays their estate agent, usually on completion. The exception is a sale by tender, where the buyer may agree to pay the agent's fee. If you hire your own buying agent, you pay them. Estate agents must also tell you up front about any referral fees.

Is a mortgage valuation the same as a survey?

No. The valuation is for the lender, to check it is happy to lend against the property. It does not protect you if something is wrong. A survey is a detailed inspection of the property's condition, for you. RICS sets three levels, from Level 1, the lightest, to Level 3, the most detailed. Have it done before exchange.

What extra costs come with buying a leasehold flat?

A service charge for running and repairing the building, which usually includes buildings insurance. Often a reserve fund for future works, which you will not usually get back when you sell. Ground rent on older leases, though most new long leases from 30 June 2022 can charge only a peppercorn. Possibly notice fees too.

Do first-time buyers pay stamp duty?

Not on the first £300,000. First-time buyers pay 5% on the part of the price from £300,001 to £500,000, so a £350,000 home costs £2,500 in stamp duty. Above £500,000 the relief is lost and standard rates apply to the whole price. Every buyer on the purchase must be a first-time buyer.

Our residential conveyancing service itemises the legal fee and every disbursement in the quote.

Sources

Costs to budget for, searches, survey, buildings insurance, deposit, referral fees: gov.uk/government/publications/how-to-buy-a-home/how-to-buy

Costs and running costs: gov.uk/buying-a-home/preparing-to-buy

Stamp duty bands and reliefs: gov.uk/stamp-duty-land-tax/residential-property-rates

When stamp duty is paid: gov.uk/stamp-duty-land-tax

First-time buyers' relief: gov.uk/guidance/stamp-duty-land-tax-relief-for-land-or-property-transactions

Land Registry fees: gov.uk/guidance/hm-land-registry-registration-services-fees

Service charges, insurance, major works, reserve funds, ground rent: gov.uk/leasehold-property/service-charges-and-other-expenses

Home survey levels: rics.org/homesurveys

Estate agents' fees: citizensadvice.org.uk/housing/buying-and-selling-a-home/selling-a-home/

This is general information about the costs of buying a home in England, not advice on your purchase. Rates and fees change; check the figures that apply on the day you complete.