Britons are at risk of losing thousands of pounds to hidden charges when buying their first home, according to new analysis. Property expert Phil Spencer has warned first-time buyers they face hidden costs of over £5,000 when purchasing a home, on top of looming stamp duty changes.
The Location, Location, Location co-presenter highlighted how new buyers often overlook significant expenses beyond their mortgage deposit. Speaking on his new YouTube channel First Home Focus, Spencer revealed these additional costs can amount to more than £5,000 before the stamp duty tax levy is even considered.
Stamp duty is charged on first-time homebuyers when the purchase property or land in England or Northern Ireland that is valued above a certain price. While the threshold is £250,000 when buying a residential property usually, anyone buying their first home is sees this allowance raised to £425,000 for homes under £625,000.
However, these thresholds will be changed from April 2025. Stamp duty thresholds will come into lowered to £125,000 for residential property purchases and £300,000 for first-time buyers getting a home under £500,000.
Outside of this tax hit, Spencer is sounding the alarm that homebuyers need to contend with other costs outside of potential charges from HM Revenue and Customs (HMRC).
Do you have a money story you’d like to share? Get in touch by emailing money@gbnews.uk.
Homebuyers are getting hit by multiple costs
GETTY / PA
Spencer identified five key hidden costs that can catch out first-time buyers. These include:
- Mortgage fees which typically range between £1,000 and £2,000 for setting up the loan, though this can potentially be added to the mortgage balance.
- A valuation fee of around £300 is required for the lender to confirm the mortgage offer.
- Homebuyer’s surveys cost approximately £1,500 and are essential for any property that isn’t newly built.
- Legal fees and conveyancing can reach £1,000 plus VAT.
- Removal costs could add another £1,000 plus VAT for those with substantial furniture.
Property expert Phil Spencer is sharing advice about property costs
PA
He also reminded buyers that buildings insurance is mandatory for mortgaged properties. The property guru outlined the impacts of these costs combined with the pending changes to stamp duty.
Currently, first-time buyers pay no stamp duty on properties up to £425,000. However, from April 1, 2025, this tax-free threshold will be reduced to £300,000. “Many first-time buyers are unaware of stamp duty costs before they apply for a mortgage – I’ve seen it happen so many times,” Spencer said.
“It’s crucial to factor this into your budget if you believe you’ll be buying over the threshold, because stamp duty can be a significant expense,” he added. The upcoming changes mean thousands more first-time buyers will be required to pay the tax.
Spencer emphasised how first-time buyers often focus too narrowly on their primary costs. “First-time buyers naturally tend to be very focused on mortgages and deposits, but you also need to factor in all the other costs associated with buying,” he warned.
The property expert shared these insights through his newly-launched YouTube channel First Home Focus. The channel aims to provide essential guidance for first-time buyers, including advice on securing mortgages and negotiating property deals.
His tips cover the complete home-buying journey, from initial financial planning to final purchase negotiations. The upcoming tax changes are already influencing the property market significantly.
LATEST DEVELOPMENTS:
Homebuyers have other costs outside of mortgages to worry about
GETTY
Buyers are racing to complete their purchases before the new stamp duty thresholds take effect.
Spencer noted this rush is “pouring petrol on property price rises” as people attempt to finalise deals ahead of the April 2025 deadline.
The surge in activity reflects growing concerns about the additional costs that will face first-time buyers after the changes are implemented.
This accelerated market activity comes as buyers attempt to secure properties under the current, more favourable stamp duty threshold of £425,000.
