Selling a property is one of the most stressful things any of us will ever do.
One of the reasons that many of us find it so difficult is that there are lots of costs to take into account, and while some of them may be expected, others have the potential to take you by surprise.
So what costs are you likely to face when selling your home? And how can you keep them to a minimum?
Early Repayment Charges
When you clear the mortgage on your existing property, there may be early repayment charges (EPC) to consider.
These are generally levied when you are still in the initial fixed or tracker period of your mortgage, and are usually worked out as a percentage of the balance you are paying off.
So for example, a five-year fixed-rate mortgage might have an EPC of 5% if you pay it off in the first year of the fixed term, 4% if you pay it off in the second year, 3% in year three, 2% in the fourth year and 1% in the final year of the fixed period.
Because it is a percentage of the balance you are clearing, it can easily run into the tens of thousands of pounds, potentially acting as a barrier for completing a move.
Once the opening fixed or tracker period concludes, and you move onto your lender’s standard variable rate, you usually won’t have to pay an ERC. As a result, moving once your fixed period has concluded has the potential to save you some serious money.
Your mortgage documents will detail what ERCs you might be subject to, while a quick call to your lender will help you establish exactly what size of fee you’ll have to pay.
Exit fee
Separate to the EPC, mortgage lenders will often charge an ‘exit fee’ in order to cover the costs of the admin involved in closing your account.
This could cost anything from £20 up to £100; it all depends on your lender. You can check whether any exit fee will be due in your mortgage documentation.
Estate agent fees
For the vast majority of us, selling a property will involve enlisting the services of an estate agent.
The idea is that they understand the local market, and can use their expertise to highlight the best features of your property to prospective buyers and get you a good price to boot.
That’s the theory anyway.
Most high street estate agents will charge you a percentage of the sale price as their fee. A study by property portal OkayLah suggested that agents charge an average of 1.42%, but this will vary significantly between different firms.
What’s more, depending on the value of your property, even a fee that looks relatively small can end up costing you a packet. OkayLah reckons that London vendors pay out an average of almost £7,000 for example.
Online estate agents may provide a money-saving alternative, as they usually charge a flat fee which will work out cheaper.
Be warned though that you will likely have to do far more yourself when selling the property, like handling the viewings and negotiating the sales price.
Energy Performance Certificate
When you’re looking to buy a property, an important consideration is how energy efficient it is. The less efficient the property, the more costly it will be to keep it warm.
Vendors are now required by the law to get an Energy Performance Certificate (EPC) when selling their home.
The EPC breaks down things like the estimated energy costs over the next couple of years, a current and potential rating for how efficient the property is (based on what changes could be made) and a rating out of five for how efficient certain property features are, like the walls and windows.
It will likely cost you at least £50 to get your EPC, which can be arranged by your estate agent. Alternatively, you can book it in yourself.
Legal fees
Both buyers and sellers need to get a solicitor on board as there are plenty of legal boxes to be ticked when completing a property transaction.
These include providing detailed questionnaires about the property covering things like boundaries, disputes and complaints as well as what fixtures and fittings are staying with the property.
Your solicitor will also draft the actual contract for the sale.
You can shop around to find the best value conveyancer, but even in the best-case scenario, you’re likely to be looking at upwards of £1,000.
Removal costs
Once you’ve completed on the sale, you will need to move all of your belongings from your old property to the new one.
And chances are, you’re going to struggle to fit it all in your car, which is why most of us turn to a professional removals firm.
The cost will vary enormously depending on location, but it’s worth shopping around and getting a few different quotes.
You can even get them to handle the packing too, so you don’t spend your evenings in the build-up to the move carefully wrapping your plates and cups in bubble wrap.
A money-saving option is to rent to a van and do it all yourself, though bear in mind that if you do that it’s your responsibility to make sure your belongings don’t get cracked on the way.
Capital Gains Tax
Capital Gains Tax is only payable on the profits made from property transactions when the property isn’t your main home, but a second property or buy-to-let investment.
Everyone enjoys a capital gains tax allowance, which is basically how much of that profit you can pocket without having to pay any tax. For the current tax year, it stands at £12,300.
The tax rate you pay depends on your Income Tax band. If you’re a Basic Rate taxpayer, you’ll pay 18% on the gain made from the sale, while higher rate taxpayers will have to shell out 28%.