Property Development Property Development Costs

Date Published:

03/06/2009

There are a number of fees you’ll have to cover. These will vary depending on the services and firms you use, and the price you paid for the property.

Solicitor’s Fees

You can hire a solicitor to deal with the legal process of buying the property, known as conveyancing. You may have to pay for search fees and these will cost up to £250, although some searches will be in the home information pack and paid for already by the seller. The solicitor’s fees will be £500 to £1,000, depending on the price of the house. Check if your mortgage provider pays the legal fees as an incentive. You could also save money by using a liscensed conveyancer (expect to pay £300 to £500) or if you have the know how by doing it yourself. Otherwise contact the Law Society to find firms in your area.

Surveyors’ Fees

Your mortgage company will carry out a mortgage valuation report and, as a guideline, this will cost between £150-£300. If your lender decides to carry out a valuation and condition survey this should cost £250-£400. A full structural survey should be around £400-£800 but the price depends on factors including the size and price of the property, the surveying firm you choose and the mortgage lender. Remember that VAT at 17.5% will be added to the cost of a survey. Find a surveyor in your area at www.rics.org.

Stamp Duty Tax

This tax is levied when you buy a property. If the purchase price is less than £175,000, no stamp duty is charged. If the price is between £175,000-£250,000, you will pay 1% of the purchase price (£150,000-£250,000 in disadvantaged areas). If the purchase price is £250,000-£500,000, you will pay 3% of the purchase price, and for properties over £500,000, you will pay 4% stamp duty.

Mortgage Fees

Many lenders charge an arrangement fee. These can range from £100 to £500 and are charged when you take out the mortgage. If you use a broker to find your mortgage, check if there’s a fee for the service. Some brokers get commission from the mortgage lender, others will charge customers up to £200.

Mortgage Payments

These will begin in the same month that completion (the legal transfer of ownership of the property) happens so you will need to budget for this from the first month. Remember the mortgage still has to be paid when the property is without tenants or unsold.

Paying A Deposit

When you exchange contracts on your property development you need to pay a deposit, which your solicitor will deal with. The amount you need to pay will depend on the purchase price, your funds and the amount of money the mortgage lender is happy to lend.

For More On Property Developing

Phil & Kirstie On Finding An Area On The Up
House Price Crash: How To Bag A Bargain
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