With a new year ahead, London is booming with more properties and a wider negotiating profile for first-time home buyers. It’s clearly the time to pack your monetary instruments and look for a suitable residence.
However, if you’re looking for flats for sale in East London, remember that the hidden costs still underlie this property-buying journey.
This year, make sure you’re updated on the latent and somewhat unexpected costs attached to the process. To remove your worries, we’re here to guide you through six types of hidden expenses, one by one.
Let’s jump on to the hidden costs below:
-
Direct or Upfront Costs
Although upfront costs, some of the costs included in this category are to be considered carefully before buying your first home. Attractive properties for sale in Whitechapel, London or nearby districts will also come with some unavoidable upfront costs, including:
Stamp Duty Land Tax (SDLT)
As a residential property buyer in the UK, you must pay the SDLT tax. Although a direct mandatory cost, it varies for first-time home buyers. Besides, the Stamp Duty tax rate is changing from April 2025. So, talk to your agent about what to expect when paying for the new home this year.
Valuation Fee
To prove your loan eligibility, you must provide the lender with the valuation of the house. This valuation often involves a processing fee, which you must include in your home-buying budget.
In London, the home valuation fee may range from £150 to £1,500 depending on the property’s size, location, condition, and complexity.
Mortgage Arrangement Fee
Mortgage processing entails a setup fee, which ranges from £1,000 to £2,000 for homes for sale in East London and nearby areas. Hiring a broker may add an extra payment to the mortgage arrangement process.
House Survey Cost
It’s highly recommended to have your potential house surveyed before paying for it. A reliable survey can reveal any downsides of the house, which you may use to negotiate the price. However, a survey may cost you around £150 to £1,500.
Solicitor Fees
One of the hidden costs when buying your first home in London is solicitor fees. An experienced solicitor can communicate and negotiate with the seller’s solicitor regarding the buying process. You may have to pay around £500 to £2,000 for a reliable solicitation based on the house’s price.
-
Moving Costs
Moving into your new abode comes with a fee often excluded from the overall buying expense. The cost will vary depending on your relocation transport, distance, amount of belongings, etc.
Removal Agency Fees
Choosing to relocate with most likely a removal service, you must pay something around £300 to £1,400 to a removal agency. The cost varies depending on the size of your new house, distance, packing, etc.
Temporary Storage Cost
If your moving date interferes with an urgent matter, you may want to store your belongings in a temporary storage facility until needed. This will cost you around £20 to £200.
-
Mortgage Securing Expenses
Apart from the regular mortgage repayments, you must consider other mortgage-related payments to secure and maintain the mortgage, such as:
Broker Fees
If you appoint a broker in your mortgage loan, you may have to pay from zero to £1,000 to the broker. A percentage of 0.35% to 1% of the loan amount can also be paid to the broker.
Early Repayment Charges (ERC)
One of the unusual but substantial costs you must consider in your home-buying budget is the ERC or Early Repayment Charge. It occurs when you overpay or complete your mortgage loan amount before the expiration of the mortgage deal. The ERC charge varies between 1% and 5% on the outstanding mortgage repayment amount.
Higher Lending Charge (HLC)
The mortgage lender can apply A Higher Lending Charge if your loan amounts are higher than the mortgage threshold. The charge can be usually between 6% and 8%. If applied, you must pay the charge upfront or in parts attached to the repayment instalments before the completion of the mortgage duration.
-
Unforeseen Costs
Some unforeseen costs you must calculate in your home-purchasing budget are related to local regulations, house conditions, lease terms & conditions, etc.
Management Company Fees
Hiring a property management company will cost you about £200 to £500 for the ‘management pack’, which includes information on the purchasing process and ownership changes.
Lease Extension Fees
To extend your property’s lease period, you may have to consider paying nearly £8,000 to £11,000, including solicitor fees, surveyors, etc.
Private Sewer and Parking Costs
If you haven’t listed the cost of the private sewer or drainage system and parking permit in your budget, these may cost you a significant amount altogether, ranging from £200 to £5,000.
-
Post-Purchase Expenses
Many home buyers forget to count the expenses that occur after the property is secured. These costs range from insurance to ongoing maintenance.
Home Insurance
Taking a loan from a mortgage lender also involves the responsibility of home insurance. The lender needs assurance that their loan or investment is safe with your house, hence the necessity of home insurance.
In 2025, the home insurance premiums may cost around £300 to £1,000 annually.
Council Tax
You must consider the council tax when buying a home in London. This may range from £1,000 to a little above £4,000, depending on the property valuation conducted by the Valuation Office Agency (VOA).
Utility, Maintenance, and Repairs
You can’t forget the connection or reconnection fees for water, gas, electricity, broadband internet, etc., for £40 to £300 per service.
Also, count the unpredictable maintenance and repair expenses that may rise to thousands of pounds once you’re settled into your new home.
-
Long-Term Costs
Long-term costs will be applicable if you’re looking for suitable apartments for sale in East London or any districts nearby. Once settled, the upcoming years will have you adjust your financial aspects regarding things like:
Increased Interest on Mortgage
For a variable-rate mortgage loan, you must pay higher monthly instalments for even a 1% increase in the mortgage interest rate. The monthly mortgage repayment may increase by an additional £150 to £200.
Inflated Service Charges
With the annual inflation rate increasing, you may have to pay higher service charges for the communal areas within your home, such as the stairs, lift, entrance hall, etc.
Wrapping Up
With six lingering costs unveiled for buying your first home in London, you’re now better positioned to settle your dream property's financial score. Moving forward, you should consult experts to find the right home in London and secure these expenses in time.
Salik & Co can be your trusted real estate partner in searching for the right property and managing the hidden costs with their longstanding market expertise. So, contact us to make the right choice without wasting any time.
