Your housing costs - a moving story

If you are thinking of moving house perhaps to upgrade to the home of your dreams or to downgrade to release equity, you really need to sit down and work out how much it will cost you because, unfortunately, moving can be full of hidden surprises.

It is said to be one of the most stressful things you can do - alongside divorce or bereavement - and many actually claim that it can make them ill while others say it leads to arguments with their partner and even physical injury. However, as the bills associated with moving start rolling in, they can be enough to make you worried sick about how you are going pay for it all.

First of all there are the things you know about - estate agent fees for selling your home usually around 1% to 2% of sale price and negotiable; fees for valuation, local authority searches and Land Registry; solicitors fees for conveyancing; and removal charges. As if all that wasn't enough, to top it all there's stamp duty too.

Every year Woolwich calculates the cost of moving for each region. Its survey for 2005 showed that the average cost of moving in England and Wales from a home worth £150,000 to one priced at £200,000 rose by 3.23% to £5,551 compared to the previous year. Moving costs depend on where you live and fees in regions such as Greater London, south east and south west tend to slightly higher.

Much depends on the value of the home and the big factor that pushes up the cost is of course stamp duty. Woolwich calculated that we spent £10.6 billion on house flitting in 2005 with around 1.8 million of us on the move and that 48% of the cost went on stamp duty - that's £5 billion into the Treasury's coffers. Estate agent fees made up 30% of moving costs and 11% goes on solicitors' fees.

Budget '06 stamp duty break little help

Although a small help for first-time buyers, the move by the chancellor to raise the threshold at which stamp duty land tax (its full name) becomes payable to £125,000 from £120,000 won't have a great impact on the cost of buying a home. Gordon Brown left the remaining tiers at 1% between £120,001 and £250,000; 3% between £250,001 and £500,000; and 4% on £500,000 plus. Remember these are not incremental rates. If your home just breaks into the next tier up, you'll pay the higher rate on the full value of the property.

In fact, as you move up the housing ladder, stamp duty makes up the bulk of moving costs. For example, Woolwich says the cost of buying a £300,000 property would be £10,060 but this rises to £31,600 for a £750,000 home, £42,000 on a £1 million residence and £83,200 on a £2 million property.

You also need to watch out for possible arrangement fees on your new mortgage, early redemption fees on the previous mortgage and property maintenance bills, if you are required to pay them. On a new mortgage often the first payment can be larger than normal because you may be paying a month in advance plus perhaps few weeks extra if you move in the middle of the month. Your solicitor should let you know how much your property maintenance bill will be - sometimes it can be higher than you think especially if future maintenance work is planned.

Watch out for the unexpected costs too!

On top of expected fees, there is the unexpected. Once you get to see your new home, in most cases, completely bare for the first time, you might see things in a different light and realise that more needs to be spent on it that you think or that things aren't working as well as they might be. Broken central heating and electrical circuits are common problems and getting an engineer out is expensive as is any kind of tradesman.

Not having a full structural survey done on your new home can be a false economy. While it saves you money at the time, if things go wrong in the future, repair bills for unknown faults can come as a shock. Even simple things like finding loose floor boards, faulty plumbing and broken locks can all take their financial toll and carpenters, plumbers and locksmiths charge a call out fee plus anything from £20 to up to £80 an hour.

Not having your possessions insured during the move could potentially add a fortune to your moving costs. Before you pack up you must tell your contents insurance company that your worldly possessions will be on the move to make sure you are covered during transit.

And if the worst happens such as the removal van fails to turn up with your possessions or your home is uninhabitable or if the sale falls through, you could end up having to pay hotel bills.

Another thing that irks many movers, according to a survey by Yorkshire Bank, is the inability to find everyday items such as the kettle or sheets and all these things cost money to replace. It may be a bore but labelling everything carefully can save you money.

22 March 2006 © Moneyextra.com

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