How much will it all cost?

Legal fees

Conveyancing is the technical term for the legal work involved in buying or selling a property. All solicitors must do a technically correct job because we are all regulated by the Solicitors Regulatory Authority, and have insurance cover against mistakes. But different firms often quote quite different amounts. Those offering the cheapest deals will normally give you the least personal service.

We reckon not to charge anywhere near the top level of legal fees. We charge at a level which allows us to provide a personal service and to have the time and flexibility to cope with problems which come up from time to time, even in the most straightforward deals. Many transactions are not straightforward, especially if the property is leasehold. Most problems actually aren’t legal ones, but to do with keeping the deal on track, especially if there is a chain of linked buyers and sellers. Our job is to solve problems.

We reckon not to charge anywhere near the top level of legal fees. But we charge at a level which allow us to provide a personal service and to have the time and flexibility to cope with problems which come up from time to time, even in the most straightforward deals. Many transactions are not straightforward, especially if the property is leasehold or if there is a chain of linked buyers and sellers. Most problems actually aren’t legal ones, but to do with keeping the deal on track. Our job is to solve problems.

If you give us a ring, we can give you a figure, based on the type of transaction. Please ring Christine on 020 7404 0702

Searches

These are for searches and checks which you have to have done on the property as part of the buying process, and which your lenders will also insist on.

Local searches. We have to check whether there are any problems about the property or the nearby area recorded at the local council. The council charge a fee for providing the answers. Each council has its own charges, but london boroughs tend to charge in the region of £250.

Drainage and water searches. We have to check with the local water company (Thames Water in London) how the property is connected to mains water and public sewers. The current charge in London (including the fees of the company who obtains them for us) is £51.46.

Environmental search. We have to check whether there are any known environmental problems affecting the property.

Plan search. We check whether there are planning matters in the vicinity of the property which might affect your decision to proceed. The charge for an Environmental and Plan search ( including the fees of the company who obtains them for us) is £70.50

Land Registry fees

When your purchase completes, the change of ownership has to be recorded at the Land Registry (the public register of land ownership) who charge a fee. These are the current fees based on purchase price.

Purchase price

Fee (£)

0 – 50,000

40

50,001 - 80,000

60

80,001 – 100,000

100

100,001 – 200,000

150

200,001 – 500,000

220

500,001 – 1,000,000

420

1,000,001 and above

700

Other legal expenses

There will be other items like bank charges as well. If you are buying a flat there may be some expenses to do with registering the change of ownership with the landlord, which can often range from £50 upwards.

Stamp duty land tax

Stamp duty land tax (‘SDLT’) is the current version of what has historically been called “stamp duty”. This is a tax you have to pay when you buy a property. The price you pay for your property determines the rate of SDLT you pay. The current rates are

• less than £125,000 0%
• £125,001 - £250,000 1%
• £250,001 - £500,000 3%
• £500,001 + 4%

It is not staggered – If your purchase price exceeds one of the lower limits by a penny, you are in the next band up and you pay the rate for that band on the whole purchase price. So if you buy a property for £125,000 you pay no SDLT at all, but if you pay £125,001, you pay £1,250. £250,000 is an even more critical point. Buy for £249,999 you pay £2,500; pay £2 more at £250,001 and you pay £7,500 – 3 times more.

You don't have to play SDLT on the value of any “fixtures and fittings”. So if the price includes carpets curtains kitchen equipment etc the price can be divided between the property itself and the fixtures and fittings. Normally, there will be no point in doing this because the saving would be too small, but if you are buying just over the price where stamp duty rates rise - e.g. £250,000 - then it is worth trying to allocate enough of the price to fixtures and fittings to push the property price below £250,000, or whatever the critical level is. That way you can push the purchase price of the property into a lower tax band or avoid SDLT altogether. But you can only do that if the fixtures and fittings are genuinely worth the price you are allocating. If you are buying for £270,000 and you try to attribute £20,000 to some raggedy fitted carpets and net curtains, that won’t be allowed. In that case, you would just have to bite the bullet and pay the tax.

You do not pay stamp duty if you are buying a residential property, which is in a disadvantaged area, at a purchase price of £150,000 or less. The HM Revenue & Customs website should be able to confirm if the property is exempt.

Survey fees

If you are borrowing mortgage money, the lenders will arrange a valuation for their own benefit and charge you a fee of a few hundred pounds.

This “mortgage valuation” as it is called is just a statement gives a brief description of the property – ie the number of bedrooms, the connected services, etc - and confirms that it is at least worth the price you are paying for it. Sometimes, the surveyor will value the property at less than the price you have offered to pay the seller. In this situation, a lender may only lend a percentage of the value given by the surveyor and it will then be up to you to make up the difference – either from your own resources or by renegotiating the price with the seller.

The mortgage valuation does not go into whether there is anything wrong with the property. So normally you would have a survey carried out (you can instruct the surveyor to do this when he is carrying out the valuation). Otherwise you run the risk of finding all kinds of problems which will cost you a lot of money when you move in.

You will have to pay the surveyor once he has done his report, which will be well before exchange of contracts, and you’ll have to pay his fees even if the purchase falls through. The amount of the fee depends on the type of survey you are having. There are a range of options from a full structural survey (appropriate when buying old houses) to a homebuyers report - which is a more limited kind of survey - which is possibly appropriate if you're buying a flat in a modern block, or a fairly standard modern house.

Hidden mortgage arrangement costs

Some lenders will charge you a fee for arranging the mortgage and reserving the funds for you. This is often called a mortgage booking fee or a mortgage arrangement fee. The amount varies from lender to lender but typically can be in the range of £500 to £1,000.
The lender may also make some other charges in the process of granting you the loan.

Higher lending charge. If you borrow more than a certain proportion of the value of the property -- typically more than 90% but it can be less -- the lender may take out an insurance policy to cover the risk of you defaulting in regard to that top bit of the loan. There is a premium for this and you will have to pay it.

Insurance fee. If you take out your own fire insurance, rather than accept the lender’s quote, you may get charged a small fee for administration, typically £25 a year.

Re-inspection fee. If the lender has to send a surveyor back to look at the property a second time -- e.g. after some works are being carried out which the lender required before granting the loan -- then there will be a fee for that. The re-inspection fee is typically £50 to £100.

Telegraphic transfer. The lender will send the loan money to your solicitors on the completion date by bank transfer. There is usually a fee of around £50 for that.

(These expenses are taken from the Financial Services Authority's website.)

Depending on your lender, these costs may be added to the mortgage debt. So they don't seem to be costs to be bothered about, but bear in mind that if you have to pay interest on them over 25 years, that does in fact add up to quite a large amount. So you should use the APR to compare different loan deals. A lender which adds on a lot of hidden charges will have a higher APR for its product than a lender which doesn't. (The APR – short for “annual percentage rate” is a standardized way of valuing the cost of a loan, which all lenders have to quote. So it’s a good way to evaluate the real cost of competing loan packages, once hidden extras are taken into account.)

Value Added Tax

You won't pay VAT on the purchase price when you buy your new home. There is no VAT on the normal sale of a purely residential property. You will have to pay VAT on the fees you pay to your solicitors, surveyors etc. Some of the expenses such as local search fees don't have VAT. So it is a bit confusing. You should always make sure you get VAT-inclusive figures when you get a quote.