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Cost of moving home rockets by 70% to almost £9,000 as estate agency fees and stamp duty rises put strain on families
The cost of moving house has soared by 70 per cent in the last 10 years and now stands at £9,000. This article originally appeared on DailyMail.co.uk
The rocketing financial burden has even outstripped the rise in house prices over the same period, according to a new report.
It means house moving costs are now equivalent to 27 per cent of average UK gross full-time wage, up from 22 per cent in 2001, putting further financial pressure on already cash-strapped families.
For families caught by the three per cent stamp duty trap the cost is even higher with those buying a property costing more than £250,000 instantly hit with a tax bill of at least £7,500.
That means those in the South East pay an average of £16,500, while London home movers pay £19,500, a Lloyds TSB report said.
With mortgage lenders demanding big deposits or substantial equity for the best rates since the financial crisis hit, the added high cost of moving has played a major part in keeping property sales stuck near record low levels.
The report looked at the cost of moving home, in terms of stamp duty, mortgage arrangement fees, estate agency fees, surveyors and solicitors' costs and removal costs.
It said that for the average mover estate agents' commission on their home sale still made up the biggest proportion of the cost at 38 per cent, or £3,400, and stamp duty followed behind at 21 per cent, or £1,876.
But the average masks the huge costs triggered by a three per cent stamp duty charge that faces those living in many areas where a family home costs more than £250,000.
A report by This is Money last November highlighted how, if that £250,000 threshold had risen in line with house price inflation since it was introduced, it would now stand at £650,000, while the £500,000 threshold for four per cent stamp duty would be £1.3m.
Lloyds report found that the average home moving bill is up 69 per cent on a decade ago, while the average house price was up 64 per cent.
Both have outstripped official inflation of just under 40 per cent over the same period.
Suren Thiru, housing economist at Lloyds TSB, said: 'With the costs associated with completing a home move in the UK rising substantially over the past decade, the task for those looking to move home has undoubtedly become more challenging.
'The significant rise in home moving costs is particularly concerning at a time when demand in the UK housing market is weak.'
The Lloyds report also highlighted the better position that first-time buyers find themselves in when it comes to homemoving costs, as they pay on average 63 per cent less at £3,300.
This is thanks mainly to having no property to sell and therefore not having estate agency fees and also to the current stamp duty break for new homeowners buying below £250,000.
How to trim the high cost of moving: By Simon Lambert of This Is Money
Tips: Moving is expensive, but you can try and trim the costs, says Simon Lambert.
Moving is a very expensive business. Once you overcome the big hurdle of raising the chunky deposit or equity mortgage lenders want for good rates, you then need to dig even deeper to actually fund the cost of the move.
For many this is impossible, hence home sales running near record lows, but even in a slump there will still be those who move, some through choice and others through necessity.
My wife and I fell into the latter category last year, we had run out of room in our one-bedroom flat after the arrival of our baby daughter in October 2010, and so last year we sold our flat and after much searching bought a bigger one.
Along the way, we did a few things to save ourselves money. Firstly, we negotiated on estate agency fees - which Lloyds says is the biggest average moving cost. We negotiated them down from 1.75 per cent fees to 1.5 per cent, but also put in a clause that said if they didn't get us above a certain amount, we would pay a lower 1.25 per cent fee.
Agents want to sell homes and get good properties on their books, if you make it clear to them you are a serious seller, are not going to demand an unrealistic asking price on your property, they will negotiate.
Even better, you could opt to try and sell your home yourself, either through a listings website, or a flat-fee agent. This could save you thousands.
Cut costs: You can negotiate on estate agency fees, with Simon Lambert getting a drop from 1.75 per cent to 1.5 per cent
We also opted for a fee-free mortgage, which helped save at least £1,000 in terms of arrangement fees and also the free valuation and conveyancing that was bundled in. Mortgages for homebuyers that offer free valuations and conveyancing are rarer than remortgages that do, but they do still exist. Ours was a Nationwide five-year flexible tracker.
The final saving was on removals. Rather than pay a removal firm, we did it with the help of a man and a van for the big stuff and a bit of enlisted friend and family help for other things. We were in the positon of moving from a one bedroom flat, so our belongings were limited and that made doing our own removals easier, others may decide that this is one cost well worth paying.
Finally, there was one thing we could do nothing about: stamp duty. Living in London, this was our biggest hit:it almost stopped us moving and has taken a massive chunk out of our savings, an overall effect that when spread across the nation I would argue is not good for the economy.
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- Cost of moving home rockets by 70% to almost £9,000 as estate agency fees and stamp duty rises put strain on families