This includes Stamp Duty, legal and surveyor fees, property searches, and moving costs, all of which are in addition to the price of the property and your deposit. While not all fees are standard and individual costs will depend on a range of factors (such as the type of property and what kind of buyer you are), these can add up.
From 1st April 2025, first time buyers (‘FTBs’) will need to prepare for these 'unknown costs' to rise, with Stamp Duty changes coming into effect that will mean they need to pay a bit more to move into their first home than they did before the change. According to new analysis from Mortgage Advice Bureau, these hidden costs could total over £18,000 - on top of the deposit.
For those looking for their first home in London and the South East, where average FTB prices can average £506,706[1], these costs could be even more significant. Stamp Duty alone on this example could cost £15,335 under the updated rules, making it crucial for buyers to plan and budget accordingly.
Estimated unknown costs:
● Legal fees: £2,000
● Surveyor costs up to[3]: £1,360
● Property searches: £300
● Stamp Duty: £15,335
● Total: £18,995
Ben Thompson, Deputy CEO, Mortgage Advice Bureau, explains:
"Buying your first home is an exciting milestone, but some first time buyers tend to underestimate the additional expenses involved. Unknown costs, such as legal and surveyor fees, and particularly the incoming Stamp Duty change, can quickly add up. It’s also important to remember some costs will need to be paid upfront, upon completion, or within 14 days of completion.
"It’s essential to factor these into your budget so as not to get caught out or cause unnecessary delays. It’s also important to consider how paying extra for more in-depth surveys, for example, might save you money in the long run.
"Speaking to a mortgage adviser can help you to be aware of and understand these costs upfront, alleviating these concerns and giving you reassurance and clarity around your finances during the homebuying process.
"Getting yourself into the strongest possible position to buy your dream first home, proceeding at pace with everything in order and budgeted for, is very much the best place to get to.”
Ben shares the key things first time buyers need to know:
1. Split the pots
Many first time buyers will have a savings pot dedicated for their deposit, but you could also consider making use of another high interest savings account to dedicate to these unknown costs.
2. Know what you’re dealing with
Speaking with a mortgage adviser early in the process could help you be more informed. Alternatively, tools like a Stamp Duty calculator can also help you estimate costs, giving you a clearer picture of what to expect. By planning for these costs, you can avoid surprises and focus on securing your dream home.
3. Don’t forget about moving day
Costs don't always stop with the legal and surveyor fees (or potential Stamp Duty charges). Make sure you also remember to budget for the moving day itself. Hiring a removal company, storage fees, or buying essentials for your new home can quickly add up, so factor them into your overall budget early on.
From 1 April 2025, the threshold for paying Stamp Duty as a first-time buyer will fall to £300,000, and they will pay Stamp Duty at a rate of 5% on the portion between £300,001 and £500,000. If the price of the property exceeds £500,000, the relief cannot be used.
References
[1] https://www.standard.co.uk/homesandproperty/property-news/first-time-buyer-penalty-buyers-paying-over-asking-price-homes-b1201697.html