Claire Pays, a chartered legal executive based in our West Wickham office, unpacks the hidden costs of conveyancing.
Most of us know moving house is expensive. What with agents’ fees, stamp duty, and legal fees, the costs can mount up quite quickly. However there are often extra fees that may occur depending on the details of your sale or purchase. Below, I’ve outlined some of the most common hidden costs.
Quotes for legal fees
At the outset of a conveyancing transaction, we try to give an accurate estimate of your fees. For a sale of a property, we include in the quote additional costs (disbursements) such as Land Registry documents, bank fees, ID fees, and of course our legal fees. On a purchase quote we will include other known costs such as Land Registry registration fees, stamp duty, Land Registry searches, bank charges, and property searches.
These fees are all outlined in our online conveyancing quote tool.
There can also be additional legal costs for dealing with a freehold property on a managed estate, a new-build property, a gift, transactions involving help to buy and lifetime ISAs, or Trust Deeds, so if you know your property transaction may include any such additional work you should advise your conveyancer at the start so they can include this in your quote for you to give you a full and accurate indication of your overall costs.
Leasehold and management costs
When you are selling a leasehold property, there will be various additional costs that we will not know until we have contacted your management company or landlord to ascertain what their fees are. Some properties have separate companies acting for the freeholder, who usually deal with ground rent and insurance, and acting for the management company who deal with service charges and day-to-day running of the building. Both have their own requirements and fees for their packs which can therefore be an additional cost varying anywhere from £200-£500 each.
If the management company or landlord has additional requirements, such as a Licence to Assign, this is an additional cost normally paid for by the seller and in London, these can vary from £500-£800 plus VAT.
There can be an assignment fee in the Lease or title documents if you are selling a retirement or shared ownership property. The rate is often 1% of the sale price and this is payable to the management company or the freeholder from the sale proceeds on completion.
Buying a leasehold property
If you are on the other side, and buying a leasehold property, the freeholder/ management company will normally have notice fees which are payable by the buyer on completion. Again, each of these can charge this fee so this can quickly amount to a few hundred pounds. If additional documents are required on top of this, such as a Deed of Covenant or a Certificate of Compliance, this incurs additional costs. These costs vary depending on the company and the freeholder, there is no fixed fee for this, and usually no limit on what the cost can be.
Another unexpected cost on a leasehold property can arise when the seller currently pays their service charge and/or ground rent monthly by direct debit. Often any incoming buyer is required to pay the whole period in full for their first period, and then they can set up a direct debit after that. This can catch buyers by surprise if they are expecting a monthly service charge going forward and then at completion must find the whole amount to be paid upfront.
Freehold managed estate costs
Becoming more common are freehold properties which fall on a privately managed estate and therefore have an estate charge and a management company. Such companies often have fees for providing their management information (paid by the seller) and fees and requirements for the new owner such as giving them notice of the new owner, membership applications, share certificates, and a Deed of Covenant, all of which are usually paid by the buyer. The fees vary greatly for each development and company.
Remember, your quote from your conveyancer can only reflect the information they know at the outset, and the fees from the management companies and freeholders are unknown until you receive the management information. This is therefore an extra cost that you should factor into your finances.
Estate Agent’s fees
Agents usually agree a fixed fee agreement with you upfront which you sign and agree to as part of your contract with them. What you may not realise is there can be additional costs for photos, marketing, EPC, identity checks, and you also need to remember to add VAT to most of the costs. The agent’s fee is not 1% of the sale price but 1% plus VAT, which can make quite a big difference.
Mortgage fees
Some lenders have upfront fees, others allow you to add fees to your mortgage but either way, you need to be aware of those costs and factor them into your expenditure. The fees and products vary depending on the lender and the product. If you use a broker, they can also sometimes have a separate fee which is payable directly to them and is often nonrefundable.
Many lenders will carry out a valuation of the property, they may cover the cost of this in your offer but again this varies so you would need to check this with your particular mortgage offer. Also, don’t forget that the valuation is for lending purposes and is not the same as carrying out your own full survey.
Survey
As above if you are buying with a mortgage your lender will usually carry out a valuation for their own lending purposes. Some lenders offer you the chance to upgrade that to a full survey. Alternatively, you can arrange your own survey, and this again is an additional cost that will be paid directly to the surveyor and is normally non-refundable once the survey has been carried out.
Removals
Depending on your circumstances and the amount you need to move, you may decide to book a removal company to help. You can of course choose to do this yourself, but if you are selling your home and buying your new home at the same time, meaning you have to move from one to the other on the same day, time is of the essence! There is a deadline time in the contract for you to vacate the property and if you have not removed all of your belongings by that time this can cause delays along the chain. Delays that go into the following day or days can lead to contractual penalties including interest and damages, so sometimes saving money on removals by trying to do it yourself, could actually end up costing you a lot more in the end.
Need a conveyancer?
Amphlett Lissimore has experienced conveyancing specialists based across our offices in West Wickham, Crystal Palace, and Bromley. We have been accredited by the Law Society under its Conveyancing Quality Scheme and have a proven track record of excellent client care. Above all, our conveyancing team will always endeavour to make the legal side of buying or selling property as stress free as possible for our clients.
About the Author
Claire Pays is a chartered legal executive specialising in conveyancing. Based at our West Wickham office, Claire can help you with the conveyancing of your home or investments, shared ownership purchases and resales, probate sales, and transfers of equity.