New policies are shaping up to bring huge changes to the cost of moving homes in the UK. These changes are expected to affect buyers as well as renters and will raise questions about affordability in an already difficult market.
UK Households Warned of Substantial £7,466 Hike in Home Moving Expenses
By Chourouk Derkaoui
Published on 18 November 2024 09:30
The cost of moving homes in the UK has skyrocketed over the years. Recently revealed data has shown a staggering increase in costs associated with it. The Labour Party government is expected to reform in regard to stamp duty, which is likely to affect prospective homebuyers and movers.
Moving Costs Nearly Double in Less Than a Decade
In 2014, the average moving home costs were roughly £6,534, which includes legal fees, surveys, removals, and stamp duty. As of now, movers incur a cost of £13,978 which is up to £7,466.
Breakdown of Current Moving Costs (2023)
| Expense | Cost (£) |
|---|---|
| Legal fees | 1,500 |
| Survey fees | 500–1,500 |
| Removal costs | 800–1,200 |
| Stamp duty (average) | 7,500 |
| Other costs (misc.) | 2,000–2,500 |
| Total | 13,978 |
Rob Houghton, founder and CEO of Reallymoving, emphasized the growing financial burden on movers:
“Raising almost £14,000 to finance a home move is a major challenge for many people, especially with the cost of living so high, making it even harder to save.”
However, Mr Houghton also stressed the urgency for many buyers to bring forward their renovation projects to take advantage of the lower stamp duty rates before they normalize next spring. Yet, he cautioned that this timeframe was too short for many, necessitating budgeting for potential increases.
Impact on First-Time Buyer Households
First-time buyers currently pay an average of £2,186 to move home, which is lower than the national average. This is due to the fact that they don't have to bear any selling costs and are often exempt from stamp duty. But this may not last for long.
Changes Affecting First-Time Buyers:
- Current stamp duty threshold: £425,000 (first £300,000 exempt for homes priced up to £500,000).
- Post-2025 threshold: £300,000 reinstated for homes priced up to £500,000.
- Impact: First-time buyers paying stamp duty will increase from 17% to 39%.
This change will disproportionately affect first-time buyers already grappling with:
- High house prices.
- Increasing mortgage rates.
- Escalating rent costs, which make saving for a deposit more difficult.
The Stamp Duty Shake-Up: Who Stands to Lose the Most?
The Labour Party's planned reforms will affect thousands of prospective buyers. Currently, many buyers benefit from reduced stamp duty thresholds, but the planned changes will result in higher upfront costs for a significant portion of the population.
Comparative Stamp Duty Examples:
| Home Price (£) | Current Duty (£) | Post-2025 Duty (£) |
|---|---|---|
| 300,000 | 0 | 0 |
| 400,000 | 3,750 | 5,000 |
| 500,000 | 8,750 | 10,000 |
These shifts could especially impact those at the lower end of the market, making it more difficult for first-time buyers to enter the property ladder.
What Can Home Movers Do to Prepare?
With the anticipated rise in costs and the reduction in stamp duty relief, experts urge potential movers to plan carefully. Strategies to navigate these challenges include:
- Budgeting for additional costs: Factoring in higher legal fees, removals, and stamp duty.
- Timing moves strategically: Moving before the stamp duty reforms take effect.
- Exploring financial assistance: Seeking support programs for first-time buyers.
The cost of homeownership and mobility in the UK is clearly set for further challenges, making prudent financial planning more vital than ever.
It’s clear that the cost of homeownership and mobility in the UK is set for further challenges; now more than ever, why should prudent financial planning be anything other than paramount.