Unexpected costs are the hidden hurdle for UK homebuyers

We now have the first Labour government in 14 years, and it’s putting the housing market firmly at the centre of its economic growth strategy. Rightly so – it’s a cornerstone of the UK economy and has a significant impact on consumer confidence, spending and overall economic growth, so it’s no real surprise to the market itself and all its many stakeholders that the Government has set out to use this to its advantage.

But, if we are to see this potential realised in any real terms, it’s necessary to acknowledge and address the issues within the transaction process as determined by homebuyers themselves. The latest Home Movers Trends Report from Smoove sets out to do just that – identifying the main concerns that holds the market back. 

Alongside the report, this blog series will take each of the issues in turn, starting with what the data showed to be one of the biggest concerns for UK homebuyers: unexpected costs. The key word here is ‘unexpected’- while obvious concerns around completion times and traditional costs may not come as a surprise, there are some important nuances to take into consideration.

While the data shows that conveyancing costs are rising, up 17% year on year, it is not this that bothers buyers. Indeed, when given a choice as to whether they would prefer a faster transaction process or a cheaper one, over half the respondents chose the former, proving cost itself may not be the main issue. Instead, it is the unexpected costs that crop up later down the line that causes them to worry. Nearly two-thirds of homebuyers in the past year encountered them, with over a quarter (27%) saying that this was the most stressful or frustrating thing about their transaction.

These expenses, which include unexpected repairs, additional legal fees and moving expenses, can quickly spiral out of control, leaving buyers feeling overwhelmed and unprepared. At times, they can become unaffordable and contribute to the fall through rate, which sits at around a third of all transactions in the UK. These financial surprises not only strain budgets but also contribute to delays in the process. According to the Open Property Data Association, property transactions now take an average of one month longer than consumers expect. First-time buyers are particularly vulnerable to these challenges, with the Home Movers Trend research finding that two-thirds of first-time buyers faced unexpected costs, compared to just over half of second-steppers.

Of course, there will always be a level of concern around house buying – as already acknowledged, it is one of the biggest financial commitments someone can make, but the fact that unexpected costs play a big part underscores the need for better education and transparency around the homebuying process to avoid such add-ons in the first place.

The conveyancing conundrum  

Having the cheapest possible services is not what the consumer is seeking. A good service is worth paying for – quality and value are critical, and it is greater clarity and better information at the outset of the homebuying journey which consumers are really after. For conveyancers, this presents an opportunity to focus on value-based pricing, taking comfort in charging appropriately for their expertise. This approach supports a more sustainable business model and also ensures that consumers receive the level of service they need to navigate the process with confidence. The homebuying process needs to be more transparent, predictable and efficient. By addressing the issue of unexpected costs and providing better information upfront, the industry can alleviate much of the stress that currently plagues buyers. For consumers, this means a smoother, less stressful journey to homeownership. For conveyancers, it represents an opportunity to deliver value and expertise in a way that supports both their clients and their business.

Download the report here.