The cost of additional fees to complete the process of buying a home, which include the likes of stamp duty, solicitor’s fees, as well as the costs of surveys, have increased dramatically, according to Barclays Property Insights.
Homeowners who have bought properties in the last year report that they now need to spend an extra £13,530 to complete their purchase.
This is a marked increased from five years ago, which saw buyers spend an average of £9,337 on additional fees – an increase of more than £4,000.
Costs are catching prospective buyers out
Though it will come as a surprise to no-one that buying a property is a costly process, the fees are still catching out some buyers, new Barclays’ data shows.
Valuations and mortgage broker fees are most likely to come as a surprise to prospective buyers, with over one in 10 (12 per cent) unaware at the start of the process of the costs they would incur.
The costs also feel unpredictable, with the types of documents required varying from property to property. A third of homeowners (34 per cent) were aware of the fact that they would be required to pay stamp duty but were unaware of the likely amount. In addition to this, a further four in 10 did not know how much to save for moving (41 per cent), surveys, or legal fees (both 40 per cent).
Another challenge for would-be homeowners
At the start of April, the temporary increases to the stamp duty thresholds that were put in place in September 2022, came to an end. Previously, any first-time buyer paid no stamp duty when buying a home worth £425,000 or more, but, from April 1st, this threshold dropped to £300,000.
Ahead of the band changes, buyers anticipated missing the deadline could cost them an average of £6,512 in stamp duty. With the deadline now passed, many prospective buyers will be redoing their sums, and, with the possibility of having to account for a bill of £13,530 in additional outlays, may be forced to reconsider their choice of property, area, or timing of their move.
Additional costs are now a significant barrier to buying a home
25 per cent of existing homeowners have said that they now see stamp duty as the biggest barrier to buying their next home.
If you drill down by age, the barrier is that much higher for Gen Z, with 39 per cent of under-25s naming it as the biggest barrier for moving.
The tax changes have also delayed some prospective first-time buyers from getting on the property ladder, with 14 per cent reporting that the recent band adjustments have impacted their ability to buy a home.
But, as shown by our recent exploration into how would-be buyers are saving for a deposit, which include embracing side hustles and finding creative ways to save, the homeowners of tomorrow still remain determined to get their foot on the property ladder.
For guidance on how to buy your first home, visit our dedicated section on the Barclays website.
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