Higher fees and taxes push up the cost of moving home in the UK
UK home owners spent £6.6 billion on moving in 2013, up from £5.2 billion in 2012 and saw the cost of moving go up by 6% in a year to £8,248, or some 25% of average earnings, a new report shows.
London is the most expensive place to move, with the average cost now £20,825, according to the research from Lloyds Bank.
It points out that the rising cost of moving is driven by increases in stamp duty, estate agency fees and legal fees, which are all up by 7% in the last year. These fees, which are typically impacted by rising house prices, make up the bulk of the £8,428 cost, as there has been no change in removal costs and surveyors fees. The average spend on stamp duty and estate agency fees now stands at £2,001 and £3,601 respectively.
In the 10 years since 2003, the total cost of moving has increased by 22%, compared to house price rises of 31%. In this period, average gross annual earnings have increased by 29%, meaning the total cost of moving as a percentage of earnings has fallen marginally, from 26% to 25%.
The home mover process for those living in London and the South East is even more expensive, with the average cost now significantly higher, at £20,825 and £16,187 respectively. Higher house prices drive these increases and the average home mover in London pays £10,850 in stamp duty and £6,510 in estate agency fees.
Significantly, the cost of moving in London equates to nearly half, 47%, of the average gross full time earnings of £43,866 of London residents.
The South East has seen the highest rise in the cost of moving over the last decade, with an 85% increase from £8,773 to £16,187. This is substantially higher than any other region and stands at 42% of the average gross full time earnings for the region. A huge rise in the average stamp duty payment as a result of higher house prices, from £2,250 to £8,157, has driven this increase.
The most affordable place to move house is in Northern Ireland, where the average cost is £4,253, 15% of average gross earnings. Since 2003, the cost of moving in Northern Ireland has reduced 15% too, as the average house price has dropped below the level at which stamp duty is paid, significantly reducing the total cost.
‘The cost of moving can be expensive and rising house prices have had an impact on this with more property sales now within higher stamp duty brackets. On top of the costs of moving, home movers also need to consider the costs involved with changing mortgages, such as product and administration fees,’ said Marc Page, Lloyds Bank mortgages director.
‘However, as earnings have also risen in the last ten years at a higher rate than the cost of moving, at a national level the relative cost of relocating to a new property is actually lower than it was in 2003,’ he added.