What costs are involved in buying a Property?
There are a number of things for you to consider in addition to the price of the property itself.
Stamp Duty
Stamp Duty (or Stamp Duty Land Tax, SDLT) is a tax levied by the Government when you are buying a home, not selling. It is paid on completion of a purchase and your solicitor will ask you to complete a Land Transaction Return and will need the funds to cover the duty shortly before the completion date. Your solicitor will then send the money to the Inland Revenue on your behalf.
Residential property rates
You usually pay Stamp Duty Land Tax (SDLT) on increasing portions of the property price when you buy residential property, for example a house or flat.
SDLT only applies to properties over £250,000.
The amount you pay depends on:
when you bought the property
how much you paid for it
whether you’re eligible for relief or an exemption
There were different thresholds and rates for residential properties before 23 September 2022.
Rates for a single property
You pay stamp duty at these rates if, after buying the property, it is the only residential property you own. You usually pay 3% on top of these rates if you own another residential property.
| Property or lease premium or transfer value | SDLT rate |
|---|---|
| Up to £250,000 | Zero |
| The next £675,000 (the portion from £250,001 to £925,000) | 5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% |
| The remaining amount (the portion above £1.5 million) | 12% |
Example
In October 2022 you buy a house for £295,000. The SDLT you owe will be calculated as follows:
0% on the first £250,000 = £0
5% on the final £45,000 = £2,250
Total SDLT = £2,250
Use the SDLT calculator to work out how much tax you’ll pay.
If you’re buying your first home
You can claim a discount (relief) if the property you buy is your first home. This means you’ll pay:
no SDLT up to £425,000
5% SDLT on the portion from £425,001 to £625,000
You’re eligible if you and anyone else you’re buying with are first-time buyers.
If the price is over £625,000, you cannot claim the relief. Follow the rules for people who’ve bought a home before.
Example
You are a first-time buyer and purchase a property for £500,000. The SDLT you owe will be calculated as:
0% on the first £425,000 = £0
5% on the remaining £75,000 = £3,750
Total SDLT = £3,750
New leasehold sales and transfers
When you buy a new residential leasehold property you pay SDLT on the purchase price of the lease (the ‘lease premium’) using the rates above.
If the total rent over the life of the lease (known as the ‘net present value’) is more than the SDLT threshold (currently £250,000), you’ll pay SDLT at 1% on the portion over £250,000.
This does not apply to existing (‘assigned’) leases.
You can work out how much SDLT you’ll pay for your residential lease using HMRC’s:
SDLT calculator
guidance on leasehold purchases
Higher rates for additional properties
You’ll usually have to pay 3% on top of SDLT rates if buying a new residential property means you’ll own more than one.
Use the SDLT calculator or check the higher rates to work out how much tax you’ll pay.
If you’re replacing your main residence
You will not pay the extra 3% SDLT if the property you’re buying is replacing your main residence and that has already been sold.
If you have not sold your main residence on the day you complete your new purchase you’ll have to pay higher rates. This is because you own 2 properties.
You can apply for a refund if you sell your previous main home within 36 months.
Can we have a stamp duty calculator built into our site?
Fees for selling a Property
Sole Agency 1% plus VAT (1.2% inclusive of VAT)
Multi Agency 1.5% plus VAT (1.8% inclusive of VAT)
Legal Fees
Dependent on a number of variables, namely the size of the transaction, your choice of solicitor and the amount of work required, conveyancing fees can vary quite dramatically, but on average, expect to pay between 0.5% - 1% plus VAT of the purchase price of the property.
Richard James can help you find a specialist firm of solicitors but whomever you instruct, we'd advise you to get a written quote and a breakdown of each individual charge before you go ahead. Within the quote, you will be subject to disbursement costs such as Land Registry fees, obtaining property deeds and various searches that your solicitor will detail in the final invoice.
For further information, please go to www.lawsociety.co.uk
Removals
We work with a number of very good, reputable firms and will be glad to recommend them upon your request.
Renting a Property
Fees for letting a Property
Sole agency 8% plus VAT (9.6% of the annual rent inclusive of VAT)
Multi agency 10% plus VAT (12% of the annual rent inclusive of VAT)
Rental admin fees
The landlord is responsible for paying agency fees, Inventory/Inventory checkout fees and Cleaning.
Prospective tenants interested in renting a property through Richard James will need to be aware of the following pre-tenancy costs due prior to the commencement of a tenancy
Reservation Fee
The equivalent of one week’s rent is to be paid to Richard James in order to remove the property from the market and commence referencing. The ‘deadline for agreement’ for both parties is usually 15 days after the reservation fee has been received by a landlord or agent (unless otherwise agreed in writing). Please note, this deposit is non-refundable if you provide false or misleading information. Should the tenancy proceed, Richard James can either refund the reservation fee directly to you or put it towards your rent or security deposit (subject to your consent).
Security Deposit
Prior to the tenancy, you will be required to pay a security deposit capped at no more than five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or above. This money is lodged with The Deposit Protection Service www.depositprotection.com
Propertymark - CMP (client money protection)
Scheme number - C0129873
