Thursday 29 September 2016

The costs of moving can quickly add up

Published 21/09/2015 | 02:30

The costs of moving can quickly add up
The costs of moving can quickly add up

There are a lot of costs associated with buying a home, apart from the purchase price and the deposit.

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These extras are often hidden, so it is easy to lose track of them.

As well as stamp duty, there are a myriad of other expenses to fork out for, including lending and estate agency fees, legal fees, surveyor costs and mortgage protection insurance.

Legal fees

Solicitors can charge a flat fee or, more usually, a percentage of the purchase price, which would rarely be higher than 2pc. This would typically equate to between €1,000 and €2,000, sometimes more.

Fees vary from solicitor to solicitor, but bear in mind that cheapest isn't always the best.

You could find a solicitor paying very, very low fees, but there is a lot of work involved in conveyancing.

If you want to buy an apartment, a solicitor could find problems or complications over the owners' management company that owns the common areas in the apartment block.

There may be other costs associated with the legal process that will usually not be included in the solicitor fees, including Land Registry fees and fees for legal searches. VAT is also payable on legal fees.

Stamp duty

The stamp duty relief for first-time buyers is now a thing of the past. Stamp duty is now simply calculated as 1pc of the selling price of any property up to €1m (2pc thereafter) and all buyers, including first-time buyers, are subject to the same rate.

So if you buy a house for €200,000, you will pay stamp duty of €2,000.

Stamp duty and VAT

It is worth remembering that VAT is applied to sales of new homes, but not second-hand homes.

When buying a new home, it is worth remembering that stamp duty is only charged on the VAT-exclusive price. In other words, stamp duty is only charged on 86.5pc of a total new house price.

So with a second-hand house worth €300,000, you will pay €3,000, but on a new house you'll pay €2,595.

Removal costs

This can be a biggie. The cost depends on how much stuff you have, although you could do it yourself. If you need a van, you can expect to pay about €100 to rent one for a day. Removal firms charge more at weekends and at the end of the month.

Surveyor

A seller is under no obligation to tell you about any defects in a property, so you should get a survey of the property. Costs vary, starting at €250 for a basic survey and rising to €1,000 for full structural surveys.

Insurance

Most lenders will insist that you take out mortgage protection insurance, a type of life insurance policy that pays off your mortgage if you die before the end of the term. Your lender will often offer to sell you a policy, but you don't have to buy it from them. Indeed, it can be much cheaper to buy elsewhere.

Home insurance

Most lenders will also insist that you take out adequate home insurance to protect your home in the event of fire or other damage. You are not obliged to purchase home insurance from your lender.

Local property tax

A property valued at between €300,000 and €350,000 attracts an annual 2015 property tax of approximately €500.

But any buyer of a new house from a developer at any point before October 31, 2016 is exempt.

Irish Independent

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