Seller’s fees outlined and explained
Have you ever watched Homes Under The Hammer – the TV show that follows the fortunes of people who buy property and usually make a profit from it? Recently, there was one outcome so good that it made the online edition of a national newspaper.
A lady claimed to have bought a property, merely tidied the garden and removed the furniture that had been left behind, and made herself an £18,000 profit when she quickly sold the house on. Like many people, we jumped straight to the comments section to find people hopping mad at the figure.
Those commenting suggested that the £18,000 profit was wide of the mark, with no confirmation whether it was gross or net. It brings us neatly onto the topic of sellers’ fees – expenses that sellers have to pay during their sale and upon completion. If you’re preoccupied with making a profit – which is not how buying and selling should always be viewed – knowing what fees are due will help with overall calculations.
To help with your planning, we have listed the usual fees a seller should expect to pay – and when.
- Estate agents fees: these are usually paid on the successful sale of a property. Each estate agent is free to set their own fee on a property-by-property basis, but it’s common to pay between 1% and 3% of the property’s value, plus VAT.
- EPC fee: every property for sale is legally required to show a valid EPC (energy performance certificate). If you haven’t sold a property since 2007, when EPCs were introduced, or your current EPC has expired (they have a 10 year shelf life), you will be required to pay for an EPC before your home is marketed. Expect to pay in the region of £50 to £150 for an inspection.
- Conveyancing fees: the preparation work to ensure a sale is sound and the legal transfer of ownership is usually handled by a solicitor or conveyancer, and this comes at a cost. There are fees attached to searches, obtaining documents, making an electronic transfer of funds and lodging a change of ownership with the Land Registry. Conveyancing fees do vary but you can expect quotes generally between £500 and £1,500 plus VAT. Some fees will be due during the transaction, while others will be presented upon completion.
- Mortgage fees: often overlooked when sellers are budgeting, there can be fees levied by banks and building societies if you settle your current mortgage using the proceeds of a sale. Called an early repayment charge, it usually applies to people paying off their fixed- or tracker-rate mortgage before the official deal term ends.
The charge is usually expressed as a percentage of what you owe – usually between 1% and 5%. Borrowers who are on a lender’s standard variable rate may not incur an early repayment charge but they still might be charged an administration or mortgage exit fee to clear the mortgage early.
- Capital Gains Tax: if you are selling a property that is not your home – such as a buy-to-let, an inherited property or a holiday rental – tax may be due on any profit you make. This is called Capital Gains Tax (CGT) and you must report and pay any CGT to the Government within 60 days of completion. If you’re a basic-rate tax payer, you’ll pay 18% CGT on any profit made from selling the property, or 28% if you pay a higher rate of tax.
- Removal costs: removal costs vary widely, depending on your approach, the distance you are moving, the amount/size/weight of items you have, and the ease of access at the property you are moving from and to. The cheapest method is to move the items yourself and make repeat trips between two properties in your own car but this will still incur fuel costs. Hiring a van or lorry and moving yourself is the next step up and the most costly option is paying a professional removals company to pack up and move your goods for you.
- Home Report: in Scotland, a Home Report must be commissioned by a seller by law and it must be made available to any buyer. It’s a document that comprises: a general property condition survey, an EPC, a mortgage valuation and a completed property questionnaire. Expect to pay around £300-£400 plus VAT for a Home Report.
If you would like help with budgeting for a property sale, get in touch. We will explain all the fees that come with using our service, as well as offer advice on getting competitive quotes for removals, conveyancing and even a new mortgage deal.
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