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Legal costs for your new home

There are all sorts of legal processes that need to be completed before you own your new home. In most cases, you will be charged for these services, so we’ve put together a list of some of the costs you’re likely to come across.
 

Conveyancing fees


Your solicitor or conveyancer will handle the legal side of your property transaction - their fees will typically range from £500 to £1,500 for first-time buyers. However, this figure will be based on factors like the cost of your home, the amount of work required, and which solicitor or conveyancer you choose. 

Solicitors and conveyancers usually charge a flat fee, a per-hour amount or a percentage of your home's value, and it's worth checking what additional fees may apply in certain circumstances. You can also choose a 'no-sale, no-fee' firm, so you won't have to pay anything if the transaction falls through.
 

Searches

Your conveyancing fee should include searches to make sure there aren't any local factors that could affect the value of your home, including new roads being planned, environmental issues or contentious developments. 

Cost: £200 to £500
 

Leasehold property fees

You might need to pay some extra costs if you’re buying a leasehold home. Your conveyancer or solicitor may charge the same fee regardless of the value of your property, although costs will differ from firm to firm.

Cost: £50 to £1,000+
 

Payment transfers

Your conveyancer or solicitor will charge a small fee to perform a Telegraphic Transfer, which is a form of electronic payment that your lender will likely require to guarantee the funds to purchase your home reach them by a certain day. 

Cost: £20 to £50

Disbursements


In addition to your general conveyancing fees, your solicitor or conveyancer will also charge for disbursements, which are payments they must make to third parties on your behalf. These include:
 

Land Registry fees

The government charges a fee to update the Land Registry's records for your home to confirm you are the new owner. The amount you pay will depend on the property's value.

Cost: £40 to £900+
 

Stamp Duty fees 

Most people buying a home in England, Wales or Northern Ireland must pay Stamp Duty, which is a tax levied on home purchases. The Stamp Duty Land Tax, to give its full name, rises in relation to the home's value, although properties worth up to £125,000 are exempt. Here is a list of Stamp Duty costs: 

Up to £125,000: No charge 
Between £125,000 and £250,000: 2% 
Between £250,001 and £925,000: 5%
Between £925,001 and £1.5 million: 10%
Above £1.5 million: 12%

In Scotland, a similar charge called the Land and Buildings Transaction Tax is used. However, homes worth up to £145,000 are exempt and the 12% top rate is applied to properties valued at £750,000 and over.  
 

Valuations and surveys 


Valuations and surveys will help you understand how much your home is worth, and the condition it is in. 
 

Valuations 

Mortgage valuations involve a surveyor assessing your home's value on the lender's behalf to make sure they are happy to lend you the money to purchase the property.  Some lenders may provide valuations as part of your mortgage deal, although you should bear in mind that you will accrue interest on the fee if you take this route. 

Cost: £200 to £1,500+
 

Surveys

Surveys also involve an inspection of the home you are hoping to buy to assess its condition, but they shouldn't be confused with valuations. Organising a survey isn't compulsory during the mortgage process, but it can save you a considerable amount of money in the long run if they highlight structural issues or essential major repairs. 

Three types of survey are available. They all cover different areas and will cost different amounts.  

Condition Reports: This is the most basic option and is usually best for newly-built homes or those in excellent condition.  Cost: Around £250

HomeBuyer Report: A HomeBuyer Report is a step up from the Condition Report and provides more detail, including a valuation. Costs start at around £400, but this varies depending on the price of the property.  Cost: £400+

Building Survey: A Building Survey is useful for large and/or old homes that need a comprehensive assessment of their condition. Cost: £600 to over £1,000
 

Mortgage costs


Aside from valuations, your lender will also charge various fees as part of approving and processing your mortgage. 
 

Arrangement fees

As the name suggests, arrangement fees are the amount lenders charge for the administration and organisation of your mortgage. Some lenders don't charge anything, while others may charge several thousand pounds. Typically, the lower your arrangement fee, the higher the interest on your loan. 

According to Moneyfacts data compiled by Which? arrangement fees for a 75% loan-to-value mortgage will cost around £1,000 on homes worth up to £450,000. [Hyperlink: http://www.which.co.uk/money/mortgages-and-property/first-time-buyers/guides/buying-a-home/the-cost-of-buying-a-house] This can be added to your mortgage but you'll pay interest on this amount, which may soon start to mount up if your arrangement fees are at the higher end of the scale. 
 

Booking fee

A booking fee - otherwise known as a reservation or application fee - is an upfront charge paid to your lender to 'book' your loan while your application is processed. The cost is sometimes included within the arrangement fee or might not be charged at all and the amount will be non-refundable if you pull out of the deal. 

Cost: Around £100
 

When will I pay these fees?


We've covered the fees you can expect to pay, but at what point in the buying process will these costs be applicable? Here is a brief timeline to help: 
 

Step 1: Arrange a mortgage


Once you've found your dream home and made an offer, it’s time to begin the mortgage application process. You may already have received a mortgage in principle, which can speed up the process. 

At this stage, you will pay arrangement and booking fees to your lender, who will also likely arrange a valuation on your behalf. You can also commission a survey to learn more about the condition of your home. 
 

Step 2: Hire a solicitor or conveyancer 


When an offer is agreed on the house, you should contact a solicitor or conveyancer to finalise the legal processes of transferring ownership. They will then organise searches, tackle any leasehold property issues and make the necessary payments to lenders. 
 

Step 3: Settle your final payments


Your solicitor or conveyancer will tell the Land Registry that ownership is transferring to you and make the relevant payments. Once you've taken possession of your new home, the solicitor or conveyancer will ask you to settle your account, which should include all fees you’ve built up so far, as well as the Stamp Duty payment.