Are renters & buyers locking up their savings in the process of moving home?

• Many will benefit from upcoming changes: renters could save 16 per cent (£235) on the cost of moving with new Tenant Fees Bill

• Additional cost of buying and moving dropped 40 per cent for first-time buyers since removal of stamp duty in the 2017 Autumn Budget

Post Office Money’s Cost of Moving study, compiled by the Centre for Economics and Business Research (Cebr)¹ has found that both renters and buyers are using the majority of their cashable savings to cover the cost of moving.

Renters need to have an average of £1,469 saved to cover the costs of moving2 including the security deposit (£944) and moving costs (£525) and on average have £1,522^{3 4} in cashable assets available to them. However, 53 per cent of 22 to 29-year-olds saved no money in a savings account, so many young renters will have no savings set aside to cover these costs at all⁵.

Buyers⁶, meanwhile, will need to budget an additional £10,132 to move home, with estate agent fees making up a third (33 per cent) of that cost (£4,815)⁷. However, 80% of prospective home buyers underestimate the additional costs of moving, budgeting for less than half of the actual cost on average (£6,782 of £10,132) which could see them dip into their savings⁸.

The cost of moving has increased by 25% for a home buyer and 13% for renters over the past decade. However, upcoming changes such as those made in previous Budget announcements by the Chancellor, may see costs ease for both buyers and renters

Cost of moving as a renter

Moving can place significant financial pressure on renters, with deposits accounting the bulk of the cost of moving as a renter (64%), £944 on average, ranging from £1,629 in London to £526 in the North East. While renters will expect to see these costs refunded at the end of their tenancy, they will likely need to wait until after they have moved out to recoup the cost. As such, renters who do not want to deplete their savings will need to set money aside specifically for their next deposit in order to make a move.

But there is some hope for renters, the Government has proposed a ban on letting agent fees under the Tenant Fees Bill, which is likely to come into effect in 2019. Agency fees make up a significant amount of the cost of moving as a renter (16% - £235).

Breakdown of costs of moving as a renter

Cost of moving as a buyer

Even after years of experience moving as a renter, people are can still be underprepared for the additional costs of moving if they decide to buy a home. Significant costs include stamp duty fees (£2,019) and estate agent costs (£4,815). Over the past ten years these additional costs have increased by 30%, but buyers are not currently budgeting more to cover the increased cost.

Breakdown of costs of moving as a buyer

Chrysanthy Pispinis continued, “Most people know that planning and budgeting are essential to any move, but most renters or buyers will only think about their deposit payment and may not necessarily plan for the additional costs. When people do move - be it renting, buying a first home or moving up the ladder – it really helps to have a very clear understanding of all of the associated costs.”

Tips for moving buyers and renters:

Budget in advance: Many people will wait until the point that they move to reckon with the costs of moving home – whether they be buyers or renters. In fact, one in five buyers will not consider common moving costs at all. Making an itemised checklist of potential moving costs and making sure you budget for these well in advance is essential to making sure you have enough set aside.

Consider letting or estate agent fees: The fees charged by letting and estate agents differ significantly, so consumers can massively benefit from shopping around. There are alternatives to high-street agents which can often greatly reduce the cost for cash-strapped movers.

Make sure to get a number of quotes: When enlisting a removal service or a self-drive van hire for moving day, be sure to get a number of quotes from different companies; you may be able to get a cheaper deal or even use them to negotiate a better price.

Cut down on removal costs: Movers can save money by sourcing moving materials second hand, such as asking their local supermarket for discarded cardboard boxes rather than buying expensive moving packs. Another way to reduce these costs is to cut down on the amount of items you are moving, by having a ‘moving clear-out’ and disregarding any items which you do not need.