This is the third and final part of our blog series on the cost of moving home. Parts one and two covered the additional costs you can expect to incur during the buying, selling and moving process – but something that people don’t always consider and prepare for before they move are the potential ongoing costs that you will have to pay for after your move.
If you’re moving to a larger property or a more affluent area then things such as council tax and utility bills can be much higher than you are used to and you may need to adjust your budget. So ideally – before you make your move – it really is worth examining these costs to work out whether you can actually afford to live in the house, once you have bought it and moved in.
1. Home Insurance
There are two types of home insurance: buildings insurance and contents insurance. Most mortgage lenders won’t loan you any money unless you agree to arrange buildings insurance – so that you are covered in the event of structural damage that may affect the value of your home. This type of insurance normally protects you from having to pay out against unforeseen events including flooding, fire or subsidence.
f you’re going to insure your building, then you might as well invest in contents cover too – in order to ensure that your belongings are also protected from damage or theft.
The price of buildings and contents insurance varies, depending on the size of the property, the location and how much cover you might need for your furniture and other items. It is worth shopping around to get a good deal. If your mortgage broker is offering you insurance, be aware that they are most likely taking a large slice of commission and you’ll probably get a better deal by going direct to insurers.
If the property that you are buying is subject to a leasehold arrangement, then it is likely that building insurance is included in the annual service charge – but this is not always the case so make sure you read the small print and check that you have the appropriate cover.
2. Council Tax
Council tax is pretty much unavoidable whether you rent or own your home and is based on the value of the property. This annual charge can usually be paid in monthly instalments and the money you pay goes towards local services including refuse collection, libraries, police and fire services.
Properties are grouped by band, based on the value of the home. There are 8 different tax bands in England and Scotland and 9 in Wales. Northern Ireland uses a completely different system to calculate their council tax, based on the rental value of the property.
If you think your band is too high, you can apply to have it re-evaluated. If you add an extension or annexe to your home, then it may be re-assessed and placed in a higher band and set at a higher rate – but this will not be implemented until the property is sold.
Members of the household who are under 18 are not eligible to pay council tax and most authorities offer discounted rates for single, disabled people or students.
If the home is not occupied or used as a furnished holiday home it may be completely exempt from council tax. And various other exemptions apply, for example if it is occupied solely by full-time students, or used to accommodate serving armed forces personnel. If you’re not sure if you are eligible for a discount of exemption it is best to get in touch with your council to find out. Discounts are not always offered automatically – for example a single person would normally need to notify the council and let them know that they are eligible for a discount.
3. Leasehold Costs
If your new home is subject to a leasehold then you will usually be expected to pay ground rent and a service charge to the owner of the freehold. These fees fund the upkeep of the property and any communal areas – the price may also include buildings insurance (see above) but check with the freehold owner if you are unsure. Some freeholders put this price up every year – sometimes beyond the rate of inflation – so again it is worth checking the current rate and whether this has been consistently rising or is likely to rise exponentially.
4. Utility Bills
If you are moving to a larger home or somewhere with off grid utilities (e.g. a cottage in the country might not have a main gas supply, so you will need to use bottled Calor gas or oil-fired heating) this might be more expensive than conventional utilities. Likewise an immersion heater with a tank is more expensive than a combi boiler which heats water on demand. So bills in your new home may be higher than you expected.
A house with more rooms, higher ceilings or an older property may not be as energy efficient as a new home so it is wise to check the energy rating and if possible ask the owners how much they spend on bills per month, on average – so there are no nasty surprises.
Water bills can also vary – and some homes are metered whilst others are not. If you have a septic tank rather than main plumbing then this will cost less in water rates but will need to be emptied regularly by professionals. If you’re lucky enough to have a swimming pool at your new home, check to see if the water is metered and how much you might expect to spend on maintenance.
This concludes our three part series on the cost of moving home, we hope you have found it useful and if you’re still in the planning stages of moving to Dorset and you want a free, no obligation quote for removals or storage, you can get a quick quote, or a more detailed online estimation service online via our website. If you’d prefer to chat face to face, rather than filling in a form then give us a call instead on 01308 423939 and we’ll be happy to help.