Costs associated with buying a house
If you have recently gone “Sale Agreed” on the property of your dreams, then congratulations are in order. It is a very exciting time but the unfamiliar legal conveyancing process can often causes major headaches; not so mention interfering with the serious decision-making over the right shade grout for the kitchen floor tiles!
As solicitors, it is our job to look after the legal paperwork and ensure that your precious pile of bricks is a solid investment, legally-speaking.
More than likely this is the single biggest financial decision you will have during the course of your life. With that in mind, it is important that you have a good idea of the costs associated with this transaction.
Firstly, as this is a big purchase, we would always recommend engaging an engineer or architect to carry out a structural survey of the property. This helps identify any planning issues, or defects with the property that may be costly to repair. These surveys can range in price between €350.00 – €850.00. You pay this directly to the surveyor. It is not something your solicitor deals with.
If you are obtaining a mortgage, the lending institution will require an independent valuation of the property. This will usually cost between €150.00-€250.00. This is separate to your structural survey and has a short life span, usually of two months. If you do not draw down your mortgage before the expiry of the valuation, you will have to pay to have the valuation carried out again. Again, your solicitor will not be involved in the payment of this cost.
A week or so prior to the closing, being the date you get the keys to your castle, your solicitor will do up a Bill of Costs and Statement of Account. This will show the balance of funds required to complete the transaction (in circumstances where your mortgage does not fully cover the balance) and also the solicitors’ fee and outlay, to include the amount to cover stamp duty.
The Statement of Account will also include an apportioned amount for Local Property Tax. On closing, the seller must show evidence that the Local Property Tax has been paid in full for the year up to 31st December. You will be required to reimburse the seller for the days you are in occupation of the property, i.e. from the closing date to 31st December.
On the morning of closing, your solicitor will instruct a law searcher to carry out searches against the property, the seller and the purchaser (if obtaining a mortgage). This ensures that there are no planning issues, and no judgments, or priority charges registered against the property. It also shows that no person connected with the sale has been declared a bankrupt etc. These searches are necessary for your protection, and for the protection of the financial institution’s interest in the property. We estimate the searches to be in the region of €170.00.
Stamp duty is payable on all transfers of property. It is charged at 1% of the purchase price up to €1 million. If the property price exceeds €1 million, stamp duty is charged at a rate of 2%. Your solicitor will arrange the payment of the stamp duty on your behalf within 28 days of the date of closing.
After the stamp duty is paid, your solicitor will submit an application to the Land Registry to register your ownership of the property and the mortgage (if any). The fees for registration depend on two things:
- The title to the property, i.e., registered or unregistered
- The property price
Considering most properties are now registered title, the fees associated with registration are as follows:
Property Price up to €50,000 €400.00
Between €50,001 – €200,000 €600.00
Between €200,001 – €400,000 €700.00
Greater than €400,000 €800.00
A mortgage can be registered against the property for €175.00. Your solicitor will advise you of the different costs associated with New Build Properties and unregistered title.
We generally estimate the above legal outlay (LPT, searches and registration fees) to be in the region of €1,000.00. You must then ensure you have additional funds to cover the stamp duty and your solicitors’ fees and VAT.
Don’t forget that setting up your home insurance and life cover will be additional costs that you need to factor in when arranging your mortgage.
Despite all the costs associated with purchasing a property, it is not all doom and gloom. There is a rewarding cuppa waiting for you in your brand new home once you find the box you put the kettle in!