London’s property market moves notoriously fast and has a history of strong housing prices. How do these higher prices translate to conveyancing and moving costs when potential homeowners consider purchasing in the capital?
The Costs Involved in Buying a Property in London vs the Rest of the UK
A study by Post Office Money and the Centre for Economics and Business Research (Cebr) has found that the average cost of moving in London increased by 97% between 2004 and 2014 to more than £16,500*– considerably higher than the 59% rise of the UK average to £11,894.
According to the Consumer Prices Index (CPI), growth in living costs during the same period was just 29.4%. This is nearly half the UK average moving costs increase and more than two thirds lower than the South East equivalent. And despite tax rates lowering for most, rising house prices have pushed many homes up into a higher stamp duty bracket.
Read more: FAQ Series: The Cost of Buying a Leasehold Property
The Cost of Conveyancing
According to the moneysupermarket.com, the average UK conveyancing fee now sits at around £850, but legal fees can cost as little as £400 + VAT. However, if you intend on purchasing in London, expect to pay considerably more as a result of the capital’s higher property values and other factors, such as the fact many properties here are leasehold and therefore require additional investigations.
Wherever you live in the UK, the basic fee is charged in one of three ways:
• As a fixed fee,
• As an hourly rate
• As a percentage of the property value
However, it’s most common for conveyancing fees to be linked to the property value, therefore it stands to reason that prospective buyers will pay more to conveyancers in London and the South East.
When buying a home there will also be disbursement costs, which are payments to third parties. These vary greatly depending on the property’s age, value and location. Local searches can cost anywhere up to £250, local authority searches up to £200 and Land Registration charges will sit between £40 and £910, depending on the property’s value.
Do note, if purchasing a leasehold property, you may also need to pay to extend the lease. This can vary considerably, but expect to pay anywhere between £5,000 and £30,000.
Every local authority’s fees will vary. You can yet again expect to pay a higher amount to the Land Registry if you’re buying in the capital due to expensive London property prices.
How Stamp Duty Affects Moving Costs
Stamp duty is also seen as a disbursement and is calculated according to the following bands:
Up to £125,000 – 0
£125,001 to £250,000 – 2%
£250,001 to £925,000 – 5%
£925,001 to £1.5million – 10%
Above £1.5 million – 12%
However, there is a higher rate if a property is a second home or a buy-to-let property. Introduced in April 2016, this levy is 3% higher and therefore stamp duty on any additional properties is charged as follows:
Up to £125,000 – 3%
£125,001 to £250,000 – 5%
£250,001 to £925,000 – 8%
£925,001 to £1.5million – 13%
Above £1.5 million – 15%
According to the May 2016 UK House Price Index summary, the average property in London costs £472,163 – more than double the UK average (£211,230). Therefore, properties here are likely to be categorised in a higher bracket and will be contributing further to increased moving costs in the capital, especially so if they are a city pied-à-terre.
Read more: FAQ Series: What is the stamp duty threshold?
No Change in Budget: Stamp Duty Changes Will Take Effect at Start of April
Howells: Your UK Property Solicitors
So, are the costs of buying a property in London higher? In most cases, yes.
If you would like to learn more about conveyancing or would like to arrange an initial call to discuss your property sale or purchase, contact our friendly conveyancing solicitors here.
