27 Jan Cost of moving in the UK rises faster than house prices
The cost of moving house in the UK has risen at a faster rate than house prices over the past decade, according to new research by Lloyds TSB. Since 2001, the average cost associated with moving home for someone who already owns a home has increased by 69%. In 2011 it cost £8,922 compared with £5,290 in 2001. This is greater than the 64% rise in house prices over the same period.
The expense of moving home is now at its highest level since the peak of the housing market in 2007 and is currently equivalent to 27% of average UK gross full time earnings, up from 22% in 2001.
The costs covered in the report include stamp duty, mortgage arrangement fees, estate agency fees, surveyors’ fees, conveyancing and removal costs. The costs of decorating and improvement prior to sale, local searches and land registration fees are excluded.
It says that the increase in the costs of moving home over the past decade has been driven by rises in the cost of all six of the house moving expenditure categories tracked. In monetary terms, estate agency fees are up £1,318, mortgage fees up £770 and stamp duty up £732. The increases in these three components combined accounted for more than three-quarters of the overall rise in moving costs.
Estate agents’ fees remain the largest single component of the cost of moving home, accounting for 38% of total costs, followed by stamp duty at 21%. Mortgage arrangement fees have more than trebled over the past decade, reflecting the changing structure of mortgage products over the period. Despite this increase, mortgage arrangement fees currently account for just 12% of the typical home moving bill.
The cost of moving in for a first time buyer was an average of £3,334 in 2011, some 63% lower than the total for home movers. This is because the typical first time buyer does not pay estate agents’ fees and stamp duty.
The overwhelming majority of firs time buyers did not pay stamp duty in 2011, partly as a consequence of the temporary increase in the starting threshold for them from £125,000 to £250,000. The removal of this concession in March will result in a significant increase in house buying costs for many of them.
Recent research commissioned by Lloyds TSB indicates that half, 51%, of consumers would expect to use their savings to cover these additional costs, compared to only a quarter who are relying on the equity in their current property to cover moving costs.
In addition, only a quarter of those that have moved recently budgeted for all these additional expenses. Of people who have moved in the last three years and hadn’t budgeted, almost two thirds, 61%, relied on savings to cover the cost of moving home, one in five, 18%, turned to friends and family, 16% used their credit card and just 14% were able to use existing equity.
‘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,’ said Suren Thiru, housing economist at Lloyds TSB.
The research also shows that cost of moving home in the South East has more than doubled, rising 132% over the past decade, the largest of any UK region. In London it recorded the second biggest increase at 127%, followed by the North East at 91%. Those living in Northern Ireland saw the smallest rise in home moving costs at 24%.