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Cost of buying a home

This content applies to England & Wales

Other costs that prospective purchasers should be prepared for when buying a home.


In order to obtain a mortgage, prospective buyers usually need to save enough money for a deposit towards the purchase price of the property they want to buy – a cash advance of a certain percentage of the property's value (typically between 5 and 10 per cent). The lender will then cover the reminder of the purchase price by way of a mortgage loan.

Help to Buy ISA scheme for first-time buyers

With effect from 1 December 2015, first-time buyers aged 16 or over wanting to buy a first residential home worth up to £250,000 (or £450,000 in London) can open a special government-backed individual saving account (ISA) in which the government will add, at the point of the purchase, 25 per cent (up to a maximum of £3,000) on top of what they have saved.

Various lenders participate in the scheme and offer different products at different rates of interests. The scheme is available to buy any kind of residential property using any kind of residential (not buy-to-let) mortgage, not necessarily Help to Buy mortgages.

More information about the Help to Buy ISA scheme, and how it works, is available from MoneySavingExpert, Money Advice Service, or the Help to Buy.

Valuation fees

Valuation fees vary, in part depending on the value of the home. If a buyer has a survey in addition to a valuation, the cost will be greater. For further information see the page on Valuations and surveys.

Mortgage indemnity insurance

Where the loan exceeds 70 to 80 per cent of the value of the property, the lender will take out insurance to cover any losses they may incur if the borrower subsequently defaults. The borrower will have to pay the cost of this policy. The costs of these vary considerably.

Solicitor's professional charges

There is no set scale of solicitor's charges. Some charge a percentage of around one per cent of the value of the property. VAT is also payable on solicitor's fees.

Lender's legal costs

In addition to her/his own legal costs, the borrower will also need to pay the legal costs of the lender, which are typically about £200 on a house purchase.

Land registry

A fee must be paid for registering new or transferred ownership. The fee is based on the value of the property and ranges from £30 to £910.

Stamp duty residential rates

Standard system

The following stamp duty rates apply to purchases of residential property (including leases) that will be a main home, except for certain purchases by first-time buyers

Property price Rate
up to £125,000 0%
between £125,001 and £250,000 2%
between £250,001 and £925,000 5%
between £925,001 and £1.5 million 10%
over £1.5 million 12%

First-time buyers

Different duty rates apply for a first-time buyer where the:

  • property will be her/his only or main home
  • purchase price is no more than £500,000, and
  • sale is completed on or after 22 November 2017.
Property price Rate
up to £300,000 0%
between £300,001 and £500,000 5%

If someone is buying a property with another, each person must be a first-time buyer in order for the first-time buyer rates to apply.

A first-time buyer is a person who has never owned a freehold or had a (long) leasehold interest in a residential property in the UK or abroad.[1]

Shared ownership

From 29 October 2018, the first £300,000 of an initial share purchased by a first-time buyer of a shared ownership property is not liable to stamp duty. The remainder of the initial share is chargeable at 5 per cent on amounts over £300,000. The relief from the full stamp duty rates will not apply to purchases of properties valued over £500,000.

This measure was announced in the Autumn 2018 Budget (para 4.9). The relief is also backdated for relevant purchases made from 22 November 2017.


The duty is charged at different rates depending on the portion of the purchase price that falls within each rate band. For example under the standard system, if the purchase price is £275,000, the duty will be 0% on the first £125,000, then 2% on the the next £125,000 (ie £2,500), then 5% on the final £25,000 (ie £1,250) and the buyer will pay in total £3,750.

Non-residential or mixed purpose

Different rates and rules apply to transactions of properties used for non-residential or mixed purposes. Several types of land and property transactions qualify for relief, including right to buy transactions, or special rules, for example shared ownership transactions.

Additional stamp duty on second homes

The following stamp duty rates apply to purchases of second residential properties:

Second property price Rate
between £40,000 to £125,000 3%
between £125,001 and £250,000 5%
between £250,001 and £925,000 8%
between £925,001 and 1.5 million 13%
over £1.5 million 15%


As with the normal rate, the additional duty on second homes is charged at different rates depending on the portion of the purchase price that falls within each rate band.

Further information and guidance on stamp duty rates and thresholds is available from HM Revenue and Customs.

Ongoing expenses

Buyers should also budget for ongoing expenses that they will have to pay after the purchase, such as contents and buildings insurance, council tax, water rates, and energy bills.

Note that the buyer becomes liable for buildings insurance for the property once contracts have been exchanged.

The mortgage lender can require that the buyer takes out insurance from exchange of contracts, but it cannot force the borrower take out its own insurance until completion.

[1] Stamp Duty Land Tax: relief for first time buyers - guidance note, HMRC, November 2017.

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