Aside from the actual cost of the property there are a number of fees to bear in mind when you buy a luxury property in London. It is important to be aware of some of the hidden expenses and to ensure that you have sufficient funds to plan for any eventuality.
Here is a list of the main fees:
1. Mortgage Arrangement Fee
If you need a mortgage you may need to pay your lender for the set-up cost. You can usually choose either to pay this fee separately or to add it to the cost of the mortgage loan.
- Cost: Anything up to 2% of the loan required.
2. Basic Valuation
This expense is required only if a mortgage is taken and may replace the survey cost (see below) if only a basic survey is chosen. All lenders require a valuation to check that the price you are paying for the property is fair. Some mortgage lenders may waive the cost of the valuation to attract more customers.
- Cost: Between £100-£300 depending on the price of the property.
3. Survey
There are two types of survey: the Homebuyer’s Report and the Building Survey. The Homebuyer’s Report is for properties that are in seemingly good condition and are less than 150 years old. This type of survey focuses on glaring problems, assesses whether the property is worth the price and clarifies what actions should be taken. A Building Survey is more thorough and will include details of major and minor defects and the implications of them. This type of survey is suitable for older buildings or properties with unusual structures and extensions. Although more expensive these surveys will unearth any major or minor structural problems.
- Cost: £250-£500 for the Homebuyer’s Report, £500-£1000 for the Building Survey
4. Legal Fees
There is no standard fee for conveyancing services so it is worth obtaining quotes from several different solicitors. The cost depends on the price of the property, the amount of paperwork involved and how complicated the transaction is. Bear in mind that if there are problems and the purchase drags on you will have to pay for the extra work since, in the UK, generally an hourly or one-off fee is established based on a maximum number of hours which is agreed on beforehand.
- Cost: initial quote could be anything from £400 upwards.
5. Stamp Duty
Stamp Duty Land Tax (SDLT) is a tax charged on properties costing more than £125,000. Occasionally, if you are buying a new property, the developer will pay the Stamp Duty for you.
- Cost: See the table below to calculate the amount of Stamp Duty you can expect to pay:
| Price of Property | % Stamp Duty |
| From £250,001 to £500,000 | 3% |
| From £500,001 to £1 million | 4% |
| From £1 million to £2 million | 5% |
| Over £2 million | 7% |
| Over £2 million (purchased by certain persons including corporate bodies) | 15% |
SDLT is not a progressive tax, but rather it is applied to the full purchase price. For example, a house priced at £2,000,000 would entail an SDLT of £100,000, but one of £2,000,001 would be liable to SDLT of approx. £140,000.
6. Land Registry Fee
The Land Registry charges a fee for transferring the owner of all the registered properties in England and Wales. The fee is charged depending on the price of the property.
- Cost: To find out how much you will pay to the Land registry use their fee calculator.
7. Local Authority Search fees
Your solicitor will carry out various verifications on your behalf to check that there are no potential problems. These include environmental and water verifications.
- Cost: The fees vary depending on the local council but you should budget for about £250-300.
8. Buying Agent Fees
This cost applies if you decided to hire a buying agent to help you find your ideal property and assist you during the process.
- Cost: Most agents charge a retainer plus a percentage of the property price. Expect to pay anything from £500-£3,000 upfront (which will usually guarantee a search period of 3-12 months) plus 1-2% percent of the eventual sale. For particularly expensive properties (for example more than £10 million) it is often possible to negotiate a one-off fee. Any extra expenses incurred by the agent are then paid for separately.
9. Other Searches, Fees and Disbursements
These include extra expenses and search fees which are paid to your solicitor such as company searches, index maps, land charges and bank transfer fees.
- Cost: Depends on how much the property costs and how complicated the transaction is but it is always a good idea to budget for a contingency fund to cover any unexpected costs.
Please note that the costs quoted above should be used as a guideline and should not be used in the place of a professional estimate.
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