Cost of moving home nearly double what buyers expect it to be

Cost of moving home nearly double what buyers expect it to be

• Homebuyers spending average £13,219 on moving home,* compared to the £7,496 they expect
• The cost of moving has increased by 65 per cent over the last decade, though costs have fallen 19 per cent in last year due to stamp duty reforms

The combined ‘additional costs’ of moving home, such as estate agent fees and conveyancing costs, have increased 65% since 2005 and now stand at an average of£13,219, according to new research.*

Post Office Money’s Cost of Buying & Moving study, compiled by Post Office Money and the Centre for Economics and Business Research (Cebr) **, found these costs increased from £8,025 in 2005 to £13,219 by the end of 2015, though they are lower year-on-year because the average stamp duty bill falling from £8,166 to £4,372 has brought the overall cost of moving home down from last year’s high of £16,381.

But despite this fall in costs, 85 per cent of prospective home buyers are still underestimating the amount they will need to set aside. Those hoping to buy in the next three years expect to spend just £7,496 on moving costs – just over half (57 per cent) of what they should actually be budgeting. ***

These surprisingly expensive moving costs present a challenge for prospective home buyers and movers - who also need £94,280 to pay for a deposit on the average home. This figure remains high even for first-time buyers, who can expect to pay an average £48,198 deposit.

With forecasts indicating the additional costs of moving will have hit £17,717 by the end of 2020, these would-be buyers will face an even greater amount they need to set aside.

Commenting on the findings, John Willcock, Head of Mortgages at Post Office Money, said:

“It is easy to focus so much on saving for the all-important deposit that people forget the additional costs that come with moving, particularly for first-time buyers who have never been through the process before.

“Planning ahead is vital and potential homebuyers should factor these costs in early on to avoid being faced with stressful, last-minute bills.”

Breakdown of additional costs of moving, and how they have changed between 2005 and 2015 (individual percentages reflect the proportion of each cost in the overall cost of buying and moving)

One of the most significant moving costs to increase over the past 10 years is the fee charged by estate agents. This cost has jumped by 60 per cent since the end of 2005 (from £3,552 to £5,697 in 2015) as estate agents seek to make the most of changing house prices.

Other fees to consider when moving to a new home include conveyancing costs and surveyors’ fees which have increased by 36 per cent (from £1,095 in 2005 to £1,486 in 2015), and 34 per cent (from £470 in 2005 to £627 in 2015) respectively over the last decade.

The amount charged by the average removals service has increased by 17 per cent over the past 10 years (from £886 in 2005 to £1,037 in 2015).

Those hoping to move in the South East have been hardest hit by these increases, with costs having more than doubled in the last 10 years (from £9,267 in 2005 to £18,710 in 2015). But London remains the most expensive place to move home with an average cost of £30,770.

John Willcock added: “Forecasts indicate that the cost of buying and moving will only continue to rise over the next five years, even with the impact of revised stamp duty rules introduced to reduce the impact on prospective buyers’ wallets. With research indicating that 85 per cent of these buyers have underestimated how much they should budget for these costs, many could be left out-of-pocket at a time when they are already financially stretched.

“We are aware of the barriers that people can face when they are looking to purchase their first home or move further up the ladder. This is why we offer a range of different mortgages aimed at a wide variety of buyers.”

Ends

* ‘Additional costs of moving’ include: estate agent fees, stamp duty, conveyancing fees, surveyors’ fees and removal costs. Costs have not been adjusted for inflation.

**Research taken from Post Office Money’s Cost of Buying & Moving study. Research carried out by Cebr on behalf of Post Office Money

*** Research conducted by Opinium on behalf of Post Office Money between 29^th April and 5^th May 2016 March, consisting of 616 online interviews of UK adults looking to buy a home in the next three years.

Stamp duty

Estate Agent fees

Conveyancing fees

Surveyors fees

Removal fees