Other regular costs of home ownership
Council tax and water charges
You may pay water charges as part of your rent, and perhaps your council tax as well. But if you buy your home, you will have to pay these separately, straight to the water services company and to the council. So, to compare the weekly costs of buying with those of renting, you must deduct your landlord’s charges for water and council tax from your rent.
You will need to consider taking out insurance cover for your home and mortgage. There are four main types:
- Buildings insurance. This is essential. It is needed to cover the full cost of rebuilding your home if it were to be destroyed by fire or some other incident. In the case of flats, this insurance is often arranged for the whole block by the landlord, in which case the landlord will expect you to contribute towards the cost of the insurance. If you need a mortgage to help buy your home, the lender will insist that you have buildings insurance.
- Contents insurance. As well as buildings insurance, you should insure the contents of your home against theft and other risks.
- Life assurance. This is needed to pay off your mortgage if you die before the end of the mortgage period. It means that your family is not left with the heavy burden of mortgage debt.
- Mortgage payment protection insurance. You need to think seriously about how you would meet your mortgage repayments if you lost your income, say through unemployment or ill-health. Mortgage payment protection insurance may give you the security that you need
There are various insurance policies which offer cover against these risks. The terms, level of cover, and costs vary. You should therefore shop around for policies that best suit your needs.
Repair and maintenance
If your home is a house and you buy it, you will be responsible for the costs of all repairs and maintenance, regardless of the condition of the property when you bought it. If you are buying a flat on a long lease, you will have to pay the landlord’s service charges. It is your responsibility to get advice on the condition of your home before you complete the purchase. It is therefore important that you have a survey done.
One off costs of buying your home
You should employ a solicitor or a licensed conveyancer to look after the legal side of buying your home. Your landlord or a Citizens Advice Bureau can advise on local firms, and your local public library should have a list of the solicitors in your area and the type of work they do. Before employing anyone, always ask how much their advice will cost.
You should have a survey of your home done. This can cost between £250 and £600, or more if your home has any special problems. You should consider one of these surveys:
- An RICS (Royal Institution of Chartered Surveyors) Home Buyers’ Survey and Valuation. This is a report and valuation in a standardised format, to tell the buyer of all significant defects, but not minor ones. It is likely to be adequate for most properties and provides a guide to value. It is likely to cost around £250-£600.
- A Building Survey. This involves a detailed examination of all the visible parts of the property. It is a good idea to have such a survey done if the property is old, or obviously in need of repair, or if you are considering making alterations. The cost of this may start at about £400, but it could be considerably more, and may not be available if your home is a flat.
You can get more information about both of these from RICS. Your lender may be able to arrange for its valuer to carry out the survey, which could save you paying for a separate valuation.
You should get a survey done after you receive your section 125 notice (the notice that has to be sent to you by your landlord if you apply to buy your home). You should ask how much it will cost before you ask anyone to go ahead with the survey.
Some types of house have been officially designated as ‘defective’ under Part 16 of the Housing Act 1985. Your landlord is legally obliged to tell you if this designation applies to your home.
Mortgage and valuation fees
If you take out a mortgage loan, you may have to pay for the cost of arranging it. You will also have to pay a valuation fee which can start at about £250 but may be substantially more.
Land registry fees
When a sale is completed, you must pay the Land Registry to register you as the new owner.
You may have to pay Stamp Duty, which is a tax that people pay when they become homeowners. Stamp Duty is worked out as a percentage of the price you pay for a property.