What are the main costs to purchase a property?
Your primary costs include:
Key purchase costs
- Stamp duty land tax
You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland.
The level of stamp duty depends on a number of factors and is based on the value/price of the property. Use our stamp duty calculator for a review.
- Solicitors / legal fees
You will require a UK solicitor to act for you and the bank. The solicitor will complete several functions including:
- Completing all necessary searches on the property
- Advise on the legal aspects and ensure the property is legally ok to proceed
- Arrange the exchange and completion dates and post completion matters including paying the stamp duty
- Manage the money transfer. Your deposit and mortgage monies will be sent to your solicitor who transfers to seller’s solicitor on completion.
Solicitors’ fees vary according to the size and location of the firm and property value/price.
Your Springtide broker can provide quotations from our preferred panel of solicitors.
- Bank fee
The bank fee is charged by the lender.
Can range from £999 to 1% of the loan.
May have the option to add the fee to the mortgage so not an upfront cost.
- Mortgage valuation
The mortgage lender will require the property to be valued. This is completed via a basic mortgage valuation only. Certain lenders will cover the cost of this whilst others will pass this cost to you. The price will depend on the property value.
- Survey report
The survey is a more detailed inspection of the property. There are two levels:
- Level 2 – home buyer
- Level 3 – full structural report
The Level 2 is most common and advisable and Level 3 is only possible on houses.
Taxes to consider:
Owning property in the UK will attract UK taxes. The level and type of tax will depend on the use and ownership of the property. Taxes include:
- Stamp duty land tax
SDLT is payable by all purchasers of UK property. The amount payable is linked to the purchase price and other factors including if you are UK or non-UK resident, purchasing a first home, 2nd home or buy-to-let property.
Your exact SDLT will be detailed in your personalised report or use our SDLT calculator to see the cost.
- Inheritance tax (IHT)
Inheritance Tax (IHT) is the tax levied on your UK property and estate upon death. This tax applies to non-UK residents as well and encompasses primary residences, second homes, and buy-to-let properties. IHT is calculated based on the equity in the property, which is determined by the property’s value minus any outstanding mortgage.
- Capital gains tax
Capital Gains Tax (CGT) is imposed on the profit realised when you sell or dispose of an asset that has appreciated in value. It is the gain itself that is subject to taxation, rather than the total amount received from the sale.
You are entitled to a tax-free allowance, known as the Annual Exempt Amount. For higher or additional rate taxpayers, the CGT rate is 28% on your gains. If you fall within the basic rate taxpayer bracket, the CGT rate will be lower.
- Income / corporation tax (rental income)
UK rental income earned by non-UK residents is subject to UK income tax. If the property is held in your personal name, you will be liable for personal income tax on the total rental turnover. Conversely, if the property is owned through a UK company, the company will be responsible for paying corporation tax, which currently ranges from 19% to 25%, depending on your annual profits.