High costs deter movers

By THIS IS MONEY
Updated: 19:00 EST, 7 April 2004

Moving home has become a hugely expensive exercise for ordinary families.

Soaring property prices have caused a domino effect on the cost of buying and selling. Many people, despite their changing needs, simply cannot afford to move.

Stamp duty is usually the biggest expense, with more and more families having to pay the top rate of tax.

But estate agents and solicitors who base their fees on the value of a property are also cashing in on the boom.

Buyers have to pay 1% duty on homes worth more than £60,000; 3% on the entire value of homes worth more than £250,000; and 4% on properties worth more than £500,000.

In parts of London and the South-East, a small house can cost £500,000.

A survey by the Woolwich - involving 1,000 estate agents and 300 solicitors - shows how fees have escalated.

According to the building society, the cost of the average home in Britain has risen from £143,000 to £163,000 over the past year.

A home owner who wants to move from a £150,000 flat to a £200,000 one will pay, on average, £1,933 to an estate agent in seller's fees; £952 in solicitors' fees for buying and selling; land registry and search fees of about £217 and £2,000 in stamp duty on the new property.

Some fees can vary. In London, estate agents can charge up to 2.5%. These expenses do not take into account removals and mortgage arrangement fees.

A couple who need to move from a £500,000 home to one worth £750,000 to accommodate their expanding family will have to pay £30,000 in stamp duty alone.

Their conveyancing fees and seller's costs are estimated by the Woolwich at more than £11,000. Removals costs vary widely but experts say most people pay between £500, and £2,000.

The high cost of moving means many people find the best option is to make do with what they have.

A Woolwich spokesman said: 'What we are finding is that more people are remortgaging and releasing equity from their house and extending their property rather than move house.

'House prices have gone up and people are thinking 'Why should I spend £5,000 to £10,000 on moving fees when I can spend that on an extension?'

A loft extension costs £10,000 to £20,000 and an average extension £10,000 to £30,000.

'You can have an extra bedroom for £30,000 instead of paying that money on moving fees.'

However, for those who do decide to move, there are some ways of keeping costs down.

The researchers found that many buyers are taking a tougher stance in negotiations.

More than one-third of buyers manage to get between 6-15% off the asking price.

Londoners were the best at knocking down prices, with half persuading sellers to drop the price by up to 15%.

The least persuasive were buyers in Yorkshire and Humberside, where only one in ten won such a reduction.