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    • Gonna-be-debt-free
    • By Gonna-be-debt-free 15th Jan 20, 5:36 PM
    • 64Posts
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    Gonna-be-debt-free
    Is it really this expensive, or are we doing it wrong
    • #1
    • 15th Jan 20, 5:36 PM
    Is it really this expensive, or are we doing it wrong 15th Jan 20 at 5:36 PM
    Hubby and I were very lucky that 20 years ago, while we were in our mid 20s, we were able to buy a house that more than suited our needs at the time. We stayed in the house for 20 years and it's now worth about £400k, but now with 2 teen/tween boys we would like to move, and we are again lucky that we are in a position to be able to add about £200k to our remaining mortgage to upsize. However we do have very specific criteria for the new house so can't just list the house, wait, and then see if there is something we like once we have sold it.

    We have seen a house we really like which is about £600k so I thought we had a couple of options (and naively expected stamp duty etc to come in about £15-20k given it was only 2% when we originally moved in here):

    a) my preferred option would have been to convert our current house to a buy to let, but that increases the stamp duty on the house we want to buy to over £60k
    b) we could list this house below market value for a quick sale, but that would mean knocking about £50k off of the estimated sale value

    So add on solicitors fees, moving costs etc and I guess if we have £200k to spend on an improvement on our living situation, we can only afford a house £130k-140k more than our current one is worth.

    I know we are very lucky to be able to afford what we already have, and to be able to consider moving, but I don't think the amounts involved are THAT unusual.

    But I don't see how people manage it? We are unusual in staying put for 20 years. I know many people who move every 4-5 years or so. So if they are paying c£50-60k in tax and fees each time they move, i.e. every 5 years, that is more than I repay on my mortgage over that period. Is that normal, or have we overlooked something?
Page 1
    • anselld
    • By anselld 15th Jan 20, 5:50 PM
    • 6,523 Posts
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    anselld
    • #2
    • 15th Jan 20, 5:50 PM
    • #2
    • 15th Jan 20, 5:50 PM
    SDLT is £20k on £600k so in fact within your expected range (just).
    You just have to manage your sale and purchase simultaneously as most people do. (Or move into rented whilst you search to buy)
    • Gonna-be-debt-free
    • By Gonna-be-debt-free 15th Jan 20, 6:18 PM
    • 64 Posts
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    Gonna-be-debt-free
    • #3
    • 15th Jan 20, 6:18 PM
    • #3
    • 15th Jan 20, 6:18 PM
    Thanks for the reply . We are in scotland so itís LBTT and if we keep the first house and let it out then itís about £60k. If we donít do that and manage a quick sell then itís about £35k.

    So even if we manage to juggle things or move into rented for an unknown period of time weíd still be looking at minimum of £40k just to move. If we were to stay there for 5 years thatís equivalent to £666 per month over that time. Thatís nearly as much as the mortgage increase would be.
    • steampowered
    • By steampowered 15th Jan 20, 6:35 PM
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    steampowered
    • #4
    • 15th Jan 20, 6:35 PM
    • #4
    • 15th Jan 20, 6:35 PM
    It can be hard to trade up - lot's of people don't manage it!

    It was much easier 20+ years ago. You hear lots of stories from the older generations about climbing up the property ladder, but the reality is that rising house prices have made that harder than it used to be, so fewer people are able to do it.

    The other point to note is that the average house price in the UK is £235,298. The average is £149,036 in Scotland.

    A £600k property in Scotland is worth 4x the average, so you will be paying more stamp duty than the average move.
    Last edited by steampowered; 15-01-2020 at 6:39 PM.
    • anselld
    • By anselld 15th Jan 20, 7:00 PM
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    anselld
    • #5
    • 15th Jan 20, 7:00 PM
    • #5
    • 15th Jan 20, 7:00 PM
    Thanks for the reply . We are in scotland
    Originally posted by Gonna-be-debt-free
    Well in could be worse. You can apparently get a castle in Scotland for the price of a one bed Flat in London.
    • Gonna-be-debt-free
    • By Gonna-be-debt-free 15th Jan 20, 7:48 PM
    • 64 Posts
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    Gonna-be-debt-free
    • #6
    • 15th Jan 20, 7:48 PM
    • #6
    • 15th Jan 20, 7:48 PM
    Ah, but it's Edinburgh, where the average house price is £300k.

    So,the people I know who move "up the ladder" every 5 years or so are just unusual? And the common perception of people doing that is a myth? (genuine question).
    • danlightbulb
    • By danlightbulb 15th Jan 20, 8:03 PM
    • 490 Posts
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    danlightbulb
    • #7
    • 15th Jan 20, 8:03 PM
    • #7
    • 15th Jan 20, 8:03 PM
    Dont expect many people move every 5 years. I stayed in my first house 4 years then moved but wasnt planning to do it again after that (got divorced then though so plans changed). This was only circa £100k houses though not the sorts of sums you're talking about.

    Its only in the current crazy world of stupid house prices that £400k is considered a starter home.
    • davidmcn
    • By davidmcn 15th Jan 20, 9:23 PM
    • 14,385 Posts
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    davidmcn
    • #8
    • 15th Jan 20, 9:23 PM
    • #8
    • 15th Jan 20, 9:23 PM
    Ah, but it's Edinburgh, where the average house price is £300k.

    So,the people I know who move "up the ladder" every 5 years or so are just unusual? And the common perception of people doing that is a myth? (genuine question).
    Originally posted by Gonna-be-debt-free
    People in general don't move house every 5 years (unless they're actually moving area) and I don't think there's a common perception of people doing it. Particularly if they've already got teenage children - why would you want to move up another rung of the ladder in another 5 years just as they're (you hope!) leaving home?

    Yes, it's expensive to pay LBTT at that sort of level, but even for Edinburgh £600k is at the top end of the market for 3/4 bedroom houses - if you can't afford it then you can't afford it.
    • scottishblondie
    • By scottishblondie 16th Jan 20, 9:44 AM
    • 2,147 Posts
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    scottishblondie
    • #9
    • 16th Jan 20, 9:44 AM
    • #9
    • 16th Jan 20, 9:44 AM
    I don't think you're doing anything "wrong", moving house is incredibly expensive - especially when you're looking at the top end of the market, and as of the last few years especially if you're in Scotland. If you know people who are moving every 4-5 years then they must have more money than sense! I really can't imagine that those folk are paying out 50-60k each time, though, as they would have to be moving around the top end of the market and retaining the previous property each time to hit those levels.

    I stayed in my first property for 9 years, the second (a smaller step in price but big step in QOL) for 6 years, and we are now in our forever house. Given the huge cost of LBTT and EA/solicitor fees, we only did our last move because we were absolutely sure that we would never want to move again. Similar to yourselves, we had very specific requirements. Had our offer on this house not been accepted we would have stayed put. As a result we had to buy before we sold and pay out the LBTT ADS. We were fortunate that we could borrow money from family to fund this overlap as our deposit was the equity in the old house.

    This purchase was a huge leap up the ladder (double the value), around the same price point you are looking, and we probably spent £40k on the move (not including the LBTT ADS which we got back later). The LBTT was the most painful part of the whole thing and used up basically all of our savings from the previous 6 years.

    An additional issue in Scotland can be if you need to pay over the HR value to secure the property. Your mortgage lender will only lend based on the lower of accepted offer or HR value, so if you decide to move do keep in mind that you'll need to have the cash (or equity) for anything you offer over and above that.
    • AdrianC
    • By AdrianC 16th Jan 20, 10:13 AM
    • 27,546 Posts
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    AdrianC
    We have seen a house we really like which is about £600k so I thought we had a couple of options (and naively expected stamp duty etc to come in about £15-20k given it was only 2% when we originally moved in here):

    a) my preferred option would have been to convert our current house to a buy to let, but that increases the stamp duty on the house we want to buy to over £60k
    Originally posted by Gonna-be-debt-free
    LBTT is £33k on the move. You're just adding 4% to it as a premium for starting a residential letting business as well...

    BTW, can you release enough equity from the property you'll be letting to still afford the £600k house? Remember, minimum 25% (so £100k) equity for a BtL mortgage...

    b) we could list this house below market value for a quick sale, but that would mean knocking about £50k off of the estimated sale value
    Ah, now we get into the perennial question of whether you list before looking or look before listing.

    If you're in a fast-moving market, then your place will sell quickly without having to knock 12.5% off the asking price. If you aren't in a fast-moving market, then why is the place you're looking at going to fly off the shelf so fast as to require a fast sale?

    I know many people who move every 4-5 years or so. So if they are paying c£50-60k in tax and fees each time they move, i.e. every 5 years, that is more than I repay on my mortgage over that period. Is that normal, or have we overlooked something?
    Yes. You've overlooked the minor detail that your numbers aren't actually right...

    £33k SDLT plus ~£5k fees is two thirds of what you're suggesting.
    And that's on a property purchase that's twice your city's average. LBTT on a £300k purchase is £4,600 - so the average is now a fifth to a sixth of your number.

    Yes, buying an expensive property is expensive in tax, even more so in Scotland. It'd be £20k in Englandcestershire, £38k with +3% - so if you want to glare at anybody, glare at Holyrood.
    • M_Python
    • By M_Python 16th Jan 20, 10:56 AM
    • 165 Posts
    • 406 Thanks
    M_Python
    Have you already ruled out the possibility of increasing the size of your current house with either an extension or loft conversion?
    • Gonna-be-debt-free
    • By Gonna-be-debt-free 17th Jan 20, 2:39 PM
    • 64 Posts
    • 53 Thanks
    Gonna-be-debt-free
    Thanks so much for all the replies It has definitely answered my question of "it is really this expensive" and the answer is "yes". It seems the (many!) people we know who regularly move house in that price bracket just really are unusual.

    We've come to the conclusion that the £600k house is about £50k out of our budget once we factor everything in.

    Just to answer a couple of questions asked, given that people have been kind enough to give their time to post, we are currently in a 3 bedroom with no garden, and wanted to move to a 4 bedroom with a garden, and there is no opportunity to extend what we are in currently.

    We did remember that we have a building plot (yes, I realise that is a strange thing to forget) so are now looking at whether we can do something with that which would meet our needs.
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