First-time buyers are failing to budget for the cost of buying their first home, with the likes of surveys, valuations and legal fees costing 73% more than anticipated, a new survey shows.
According to home builder Barratt Homes, over half of first-time buyers are spending £4,955 on average on the fees and costs of buying a home.
Of those affecting buyers, valuation fees, survey fees and arrangement fees were the costs most often forgotten about by first timers, with 18% of respondents admitting to having been unaware of each.
Stamp duty and broker fees were amongst the most commonly undervalued costs. stamp duty was found to be almost £700 more than expected, while broker fees were more than £630 extra. Overall, first-time buyers were found to be undervaluing specific costs by an average of £605.
In the past five years, over 30% of first-time buyers have looked to the Bank of Mum and Dad to cover these additional costs, but that has grown from 24% five years ago to 40% of buyers in the last year.
For some, budgeting for fees isn’t proving an issue – one in five are actually saving money, budgeting more than they need by an average of just over £1,200. This is in line with the sense that some first-time buyers can afford the extra costs, but lack the knowledge of where their money is most needed.
Over the five-year period, 59% have used existing savings to cover these additional costs, indicative of a first-time buyer with available savings, but without an understanding of what they need to cover.
A Barratt spokesperson said: “To those looking to buy their first home, £2,000 can be a large amount of money, which is why we have launched our latest online guide, part of our ongoing commitment to help buyers budget better.
“The results of this research clearly show buyers are struggling to understand not only how much they need to budget, but also what that budget should be covering. However, where people are able to seek out and receive expert advice, not only are their budgets helping them plan better, but almost a quarter of people are making substantial savings as a result.
“It’s encouraging to see younger first time buyers seeking out advice beforehand and benefitting from it. As homebuilders, we must continue to provide the best possible advice on what to expect when buying a home, as well as promote initiatives such as Help to Buy to continue encouraging buyers onto the property ladder.”
Barratt’s new online guide to make buyers more aware of the fees and costs can be found here.
