Buying a home is probably the single largest purchase anyone ever makes. It’s a big financial outlay in deposits, fees, moving costs and furnishings.
In the current climate with interest and mortgage rates at their highest in years – it makes sense to know exactly what you’re doing ahead of time so you can budget accordingly.
One of the areas of home buying that can seem mystifying to the unseasoned buyer is that of fees. If you’re looking to buy at the moment, you will undoubtedly have had friends or family mention fees to you.
But do you know what fees they’re talking about? What do they cover? Who do you pay, and most importantly, how much?
Fees have been increasing along with house prices and interest rates
Unfortunately, it’s not just house prices and interest rates that have gone up recently. According to Property Solvers’ annual research of legal practices (in England and Wales), the average residential conveyancing fees have risen by just over 8% since early 2022.
The average quote for conveyancing work on a freehold property is now at around £1,200, and closer to £1,500 for a leasehold property.
There has been a lot of work done by those in the conveyancing industry over the last few years to increase transparency around conveyancing fees and referral fees. Earlier this year, a pilot of various digital comparison tools was run.
The aim is for consumers to make an informed choice based on the level of the service you can expect from the conveyancer you instruct, not just the cheapest.
What are the fees you will pay when buying property?
There are several different fees involved in the purchase of a property. These are broken down as:
The conveyancer’s fee
You are paying the conveyancer for the time it takes them to do the legal work.
Search fees
These include local authority searches to check there are no planning, pollution or conservation issues with the property you intend to purchase. There are also environmental searches which look at flooding risks, for example.
Water and drainage searches make sure your home is connected to a public water supply and sewer.
And finally, the Land Registry search ensures that the title register and title plan are all up to date and filed correctly. This ensures the seller actually owns the property they’re selling.
Disbursements
These are costs payable to third parties that relate to your purchase, for example, stamp duty land tax (SDLT) when buying a house.
Current bands for SDLT are nothing to pay on the first £250,000 of your home’s value, 5% on the portion between £250,001 and £925,000, 10% on the portion from £925,001 to £1.5 million and 15% on anything above £1.5 million.
Completion fee
The cost of providing you with official copies of all the documents needed to prove you are now the legal owner of the property you have just bought.
You should ask any conveyancer you are thinking of instructing for a quote before you engage their services.
Request a breakdown of fees first
Any good quality conveyancing practice will be happy to provide you with a breakdown of the fees, so you are clear on what monies will be due and when.
You can see an example of the costs template that practices regulated by the CLC should use here.
You should also be wary of a ‘race to the bottom’. Cheapest doesn’t always mean best, and you should use websites such as Trustpilot, to read reviews about the quality of the service other users have experienced before committing.
Personal recommendations from friends, family and colleagues are also a great way to find a conveyancer and compare their service offering to others you may be considering.
Don’t be afraid to ask about referral fees
You may have also heard of referral fees. Referral fees aren’t paid directly by you, the property purchaser, but are paid by some conveyancing firms to estate agents in exchange for being recommended to their clients. Of course, the cost does fall to you, the client, in the end.
While the practice of referral fees has attracted a lot of criticism in recent years, it’s still acceptable as long as the conveyancer makes it clear to their client that the practice is paying a referral fee.
CLC-regulated firms are required to make clear to clients if they are paying a referral fee, but to make the system truly transparent, those making the referral and receiving the fee must also make the client aware.
Don’t be afraid to ask! Estate agents and conveyancers alike should be happy to answer any questions you may have.
If you are buying or selling a property, you can find more advice on the topic as well as a list of CLC-regulated conveyancers here.
Regulation means they are monitored by us to ensure they comply with our high standards and work in the best interests of consumers at all times.
Our practices should also have the CLC secure badge displayed prominently on their website, which is linked to ours and which, when clicked on, will confirm they are genuinely regulated by us.
Stephen Ward is director of strategy and external relations at the Council for Licensed Conveyancers
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