Understanding the Costs of Buying a New Home

Beyond the Price Tag

Buying a home extends beyond just the property value, with further additional expenses that need to be considered in your budget. Being aware of the average figure of these costs allows you to make well-informed decisions and not be caught out by pesky ‘hidden’ fees. We’ve outlined the main expenses below so you can stay ahead of the curve during the home-buying process.

Learn more about the buying journey Sky-House Co

Summary of expenses

Although not an exhaustive list, the general range of major expenses is listed as shown below.

Expense	Price range
Mortgage arrangement fee	£0 – £2,000+
Mortgage broker	£0 – £1,000+
Solicitor fee	£1,000 – £2,000+
Valuation fee	£100 – £800
Property survey	£400 – £1,500
Stamp duty	0% to 12% of home value
Building and content insurance	£250 to £350

Deposit

Typically, buyers will have a deposit in place before viewing properties, which will range from a minimum value of 5% to 10% of the property value. Although this is not a strict percentage requirement, a higher deposit usually offers better mortgage rates and opens the scope of potential as a buyer.

For example, a £250,000 property with a 10% deposit of £25,000 equates to an LTV (Loan to Value) rate of 90%. A 40% deposit of £100,000 would offer an LTV of 60% and allow for better rates.

There are several government schemes available that can help you save for a deposit, most notably the Lifetime ISA (LISA) which lets you put in up to £4,000 per year and the government add an additional 25% bonus of up to £1000. There are additional schemes such as shared ownership and help-to-buy mortgage guarantee schemes where you can purchase a property with just a 5% deposit.

Mortgage expenses

When choosing your mortgage, a bank or building society will typically have an arrangement fee in place. Usually, the higher the upfront cost, the lower the interest rate. This can vary depending on the value of the property, the loan term and the LTV (Loan to Value) ratio.

The arrangement fee can be any price from £0 up to £2,000+ – although the average lies above the £1,000 range. A popular option is adding the fee to your mortgage, however, this should be considered beforehand since the fee will also gain additional interest.

Mortgage lenders will also need to conduct their own property valuation to determine if the home is worth the value they intend to lend to you. This price can vary and may be included as part of your upfront fee, with typical costs ranging between £150 to £800, averaging around £300, depending on the property type and scheme.

Mortgage Brokers

A mortgage broker helps buyers find the best mortgage rate for their property value and deposit, often best utilised for home buyers who are in complex chains or opting for listed buildings. There are a plethora of mortgage brokers that charge no fee, while some can charge into the thousands.

Conducting thorough research to find a broker that fits within your budget and can communicate effectively is essential to avoid any ‘hidden’ expenses. Remember, a broker is not mandatory and is valuable to you depending on your buying journey.

Solicitors

One of the largest expenses when buying a property are the legal fees, and investing in a reputable conveyancing solicitor is valuable. Solicitors handle all the legal processes, transferring the property from the seller to the buyer and the movement of funds.

It’s important to shop around and have a firm quote when settling on a solicitor, with many costing up to £2,000 in the process. A solicitor can set their pricing in varying ways, with some charging a percentage of your property value, so it’s imperative to outline what your quote will be.

Conveyancing typically encompasses work such as:

Property searches
Request title deeds
Liaise with mortgage lender
Organise stamp duty
Transfer land registry ownership
Draw up contracts
Transfer finances and communicate to the seller
Provide legal advice
Complete the property sale

Surveyor Costs

A survey is a valuable investment and should not be overlooked despite the temptation to save additional costs. Property surveys can save home buyers significant money by recognising expensive issues and additional work that is required. This can allow the buyer to renegotiate an offer or request the sellers to make necessary repairs to the property. They can cost anywhere between £400 to £1500, depending on the survey level and property type.

Level 1

Condition Report

A basic report that provides a general outline of the property condition and any major issues. This report is ideal for conventional buildings and newer properties.

Level 2

HomeBuyer Report

Delves into further details regarding a property’s condition, including checks of the roof, chimneys, guttering, plot, drive and drains. This survey is most suitable for conventional properties that are in reasonable condition and less than 50 years old.

Level 3

Building Survey

This is the most comprehensive report and provides a detailed inspection of the entire home. This is recommended for properties more than 50 years old, however it comes at a higher price tag.

Snagging Inspections

For newly built properties, snagging inspections are carried out along with the homeowner’s contribution rather than a full survey – although you are entitled to conduct any survey you deem fit. Developers then should repair any issues noted up to two years after this. A snagging survey typically costs around £300.

Stamp Duty

Stamp duty tax is dependent on the value of your property, its location, and if you are a first-time buyer. The SDLT is implemented by the HMRC and is a legal requirement, worked out between 0% and 12% of the property value.

First-time buyers can benefit from stamp duty relief for properties up to a certain value. The percentage rates are outlined as shown below:

First-time buyer stamp duty after April 1, 2025

Property value	Stamp duty percentage
£0 – £300,000	0%
£300,000 – £500,000	5%
£500,000	Normal stamp duty rates

Stamp duty rates for non-first-time buyers after April 1, 2025

Property value	Stamp duty percentage
£0 – £125,000	0%
£125,000 – £250,000	2%
£250,000 – £925,000	5%
£925,000 – £1,500,000	10%
£1,500,000+	12%

Home Insurance

When taking out a mortgage, it is typically expected by the lender to take out building insurance. This ensures the structure of your home is protected, including all fixtures, and fittings within your property boundary in the event of a fire, flood or other damage.

It is considered standard to purchase building and content insurance together which averages at £230 per year. A life insurance policy is also valuable should anything happen before the mortgage is paid off.

Leasehold Properties

When buying a property, the phrases freehold and leasehold consistently come up. A leasehold property means that a landlord owns the land and you own the property for a set period, as defined in a lease agreement. A lease will typically last anytime between 90 to 999 years.

When leasing a property, a yearly ground rent fee is required which can vary from as low as £10 a year to £500+, depending on stipulations set by the landlord. Monthly service charges can also apply for building maintenance, which will be set accordingly by the landlord.

It’s important to read the fine print of what you’re liable for. Some homeowners are also expected to pay a fee towards major work across communal areas. If buying a freehold property, these charges do not apply. However, a nominal fee may be paid towards estate management in new-build neighbourhoods for local area maintenance.

Additional Costs to Consider

Beyond the property price, several smaller expenses can arise throughout the home-buying process. These fees ensure a smooth transaction but can add up quickly if not accounted for. From securing your plot with a reservation fee to selecting premium finishes for your new-build home, understanding these costs upfront helps you budget effectively and avoid surprises.

Reservation fee

Applicable to new-build homes, allowing you to reserve your plot and take it off the market. This is usually between £200 to £2,000 depending on the property, location and developer. Often, the reservation fee can be deducted from the property price.

Extras and upgrades

When purchasing a newly built home, modern kitchen, bathroom, flooring and painting choices come integrated as standard. However, depending on the kind of finish you require, certain design choices may have additional expenses.

General moving costs

Moving home can be costly even after the purchase, from the hire of removal vans, storage units, cleaning services, mail redirection, new furnishings, childcare and any other additional costs that can add up.

Bills and repairs

Upon moving into your new home, you’re liable to begin paying council tax and other additional bills. Consider how much your water, gas and electricity will be and if there are any repairs that need rectifying immediately

Discover beautiful homes with Sky-House

Whether it’s your first home, or you’re looking for your next property – at Sky-House Co., we’re upfront about the value of our homes, offering streamlined processes and a hassle-free approach to the home-owning journey.

From reservation to completion day, our dedicated and thorough site managers are on hand to guide you through the process for your peace of mind. Our homes are integrated with next-gen sustainable technology and are beautifully designed to create light and airy spaces.

If you require more guidance or want to find your perfect community, a member of our helpful Sky-House team will happily assist with any enquiries!

Get in touch Sky-House Co

Choosing a Sky House really was the best decision. My Sky House is completely different to all new build homes and that's why I love it. Hassle free with all the extra details. Of course, the economic values are great but the roof terrace is the perfect touch and my favourite part.

Resident at Fox Valley

I love the sense of space and light. I like how every part of the house has a purpose and feels different in its own right. I think one of my favourite spaces is the landing. It could easily have just been an after thought - but I like that it feels like an extra little room to sit and read or just chill in.

Resident at Oughtibridge Mill