THE COST OF MOVING HOME INCREASES BY MORE THAN HALF IN THE LAST DECADE

• The additional costs of moving home have increased by more than half over the last 10 years and are now £11,894
• Prospective home buyers expect to spend only £6,895 – with 84 per cent underestimating the cost of moving
• Estate agency fees increase by 61 per cent over the last decade –while house prices have risen by 39 per cent on average
• These costs are on top of the £90,889 the average buyer needs to find for a deposit
• The additional costs involved in moving home are estimated to reach more than £15,000 by 2020

The ‘additional costs’* of moving home, such as estate agent fees and conveyancing costs have increased by almost 60 per cent since 2004 – compared with a 29.4 per increase in the cost of living**, according to research from Post Office Money’s Cost of Buying & Moving study.

The study, compiled by Post Office Money and the Centre for Economics and Business Research (Cebr) ***, found these costs increased from £7,475 in 2004 to £11,894 by the end of 2014. These expenses increased by 20 per cent in the last year alone, adding yet another challenge for prospective home buyers and movers - who need more £90,889**** to pay for a deposit on the average home. This figure remains high even for first-time buyers who pay an average £48,959 deposit.

Despite the cost of moving increasing the majority (84 per cent) of prospective home buyers are still underestimating the amount they will need to set aside. Those hoping to buy in the next three years expect to spend just £6,895 on moving costs – just over half (58 per cent) of what they should actually be budgeting. *****

With forecasts indicating the additional costs of moving will have hit £15,414 by the end of 2020, these would-be buyers face an even greater shortfall in the amount they need to set aside.

Commenting on the findings, John Willcock, Head of Mortgages at Post Office Money said:

“With prospective home buyers’ attention firmly fixed on saving for a deposit, the additional costs of moving can often come as an afterthought – particularly for first-time buyers who are taking their first steps on the property ladder. Although house prices may continue to rise there are steps buyers and movers can take to reduce the amount they pay on top of this. Planning ahead is essential and potential homebuyers should be setting aside savings specifically for these costs. These ‘add-ons’ should be considered as part of the overall cost of buying or moving home.”

Breakdown of additional costs of moving, and how they have changed between 2004 and 2014 (individual percentages reflect the proportion of each cost in the overall cost of buying and moving)

One of the most significant moving costs to increase over the past 10 years is the fee charged by estate agents. This cost has jumped by 61 per cent since the end of 2004 (from £3,229 to £5,214 in 2014) compared with a 39 per cent increase in house prices over the same period as estate agents seek to keep up with changing house prices.

Other fees to consider when moving to a new home include conveyancing costs and surveyors’ fees which have increased by 37 per cent (from £1,039 in 2004 to £1,419 in 2014), and 51 per cent (from £402 in 2004 to £607 in 2014) respectively over the last decade.

Even renters who move between properties are not exempt from moving costs; the amount charged by the average removals service has increased by 21 per cent over the past 10 years (from £855 in 2004 to £1,034 in 2014).

Those hoping to move in the South East have been hardest hit by these increases with costs jumping by 97 per cent in the last 10 years (from £8,907 in 2004 to £16,510 in 2014). However, London remains the most expensive place to move home with an average cost of £27,946.

John Willcock adds: “Forecasts indicate that the cost of buying and moving will only continue to rise over the next five years. With research indicating that 84 per cent of prospective homebuyers have underestimated how much they should budget for this, many potential home buyers could be left with surprising costs at a time when they are already financially stretched. The good news is the Government’s recent stamp duty reforms have relieved some of the financial pressure of buying and moving home, and by cutting the amount they pay for additional costs prospective buyers can ensure they’re spending as little as possible.

“We are keenly aware of the barriers that people can face when they are looking to purchase their first home or move further up the ladder. We always seek to provide solutions to the problems wherever we can, such as our new range of mortgages with cashback offers and some fee-free deals.”

Ends

* ‘Additional costs of moving’ include: estate agent fees, stamp duty, conveyancing fees, surveyors’ fees and removal costs

** Consumer Price Inflation (Dec 04 – Dec 14)

***Research taken from Post Office Money’s Cost of Buying & Moving study. Research carried out by Cebr on behalf of Post Office Money between September 2014 and March 2015.

****Figure taken from ONS House Price Index, January 2015

***** Research conducted by Opinium on behalf of Post Office Money between 31^st March and 7th April 2015 consisting of 598 online interviews of UK adults looking to buy a home in the next three years.

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