Estate agent fees ‘now account for almost half of moving costs’ and are biggest single expense, claims bank

Estate agency fees have been singled out as the biggest cost of moving house.

The claim is in research by Lloyds Bank based on an average property price of £265,238 – and an average 1.8% agency fee.

This is a Which? figure dating back seven years, although Which? itself has since accepted that the average fee is 1.2%.

https://www.which.co.uk/money/mortgages-and-property/home-movers/selling-a-house/estate-agent-fees-and-contracts-an2n90t09n2g

Others put the average agency fee as lower still, given the pressure from online agents and the battle to win instructions.

The bank’s claims, embargoed until this morning, are likely to obtain space – and credibility – in the national press, while infuriating those agents who charge far less than either 1.8% or 1.2%

The bank claims that the total cost of moving – incorporating agency, legal and conveyancing fees as well as Stamp Duty and removals – is £12,110 as of the end of the second quarter of 2018, up 4% annually.

Estate agency charges – based on the infamous 2011 Which? research of 1.8% plus VAT – were the biggest cost at £5,729, says the bank, while Stamp Duty has increased by the most compared with the same period last year, up 13% to £3,262.

The bank said both these costs have been pushed up by rising house prices.

However, if a charge of 1.2% estate agency fees were applied, including 20% VAT, the average cost to the home mover would be £3,819 – still higher than the average Stamp Duty but with the gap narrowed.

The research also uses Lloyds in-house data, claiming survey fees have decreased by 15% annually, but that the cost of conveyancing is up 3%.

Andrew Mason, mortgages director at Lloyds Bank, said: “The costs involved when moving home have risen again over the past year, with the average now topping £12,000 for the first time.

“The positive growth seen in house prices will increase Stamp Duty and also provide equity to help pay these fees, but it’s important to consider the full costs involved when going through the home moving process and make sure all bases are covered to avoid any unexpected shocks at the time.”

Here are the Lloyds Bank costs of moving:

Estimated costs 2008 (£) Estimated costs 2017 (£) Estimated costs 2018 (£) 1 year % change 1 year  change £
Stamp Duty 2,101 2,897 3,262 13% 365
Estate agency 4,444 5,571 5,729 3% 158
Surveyors 540 665 565 -15% -100
Home removal 1,024 1,141 1,168 2% 27
Conveyancing 1,051 1,290 1,326 3% 37
EPC 60 60 60 0% 0
Total cost of moving home 9,220 11,624 12,110 4% 486
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41 Comments

  1. smile please

    Ha ha ha, I and others would love an average 1.8 fee!

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    1. Richard Rawlings

      So why don’t you charge it Smile please? I know plenty of agents consistently exceeding 2%

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      1. surrey1

        Yawn.

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        1. wardy

          Yawn x2

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      2. fluter

        No doubt the same ones that charge unjustifiably high lettings fees and have forced the government to impose a lettings fee ban!

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        1. aSalesAgent

          The difference is a homeowner could go find a cheaper estate agent or online-only lister if they do not think an agent is worth the 2% fee they are asking for. Tenants have little option but to pay the letting agent’s fee once they find a suitable property.

          A successful sales agent will find their level.

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      3. smile please

        I am sure there are agents charging 2% out there.

        Couple of things,

        1. I could not live with myself charging nearly 9k to sell a home. Probably makes me a bad business man but i believe a fair fee not an extortionate one.

        2. It depends on other market factors if circa 50 agents are 1% or below getting 1.25 is a challenge. Up until a couple of years ago we were charging 1.5 but the market has changed along with the clients expectations. I am sure in some pockets of the country 1.5 plus is still achievable same way some agents do not need to be on RM however in the main its not practical.

        However, its nice to see you back at the training roots level not pushing third party ‘tech’ 😉 Its a much better debate to have.

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        1. surrey1

          Our average fee is around £9k, but the volumes we deal in would make some parts of the country wonder what we do with our days I’m sure. As a percentage that’s circa 1.2%. Likewise fees have eroded as more agents have opened, volumes have contracted and agents are operating in ever wider areas to compensate. Meanwhile costs keep on marching up. What a time to be alive! 🙂

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          1. smile please

            Living the dream, aren’t we 🙂

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    2. Moveaside01

      it was the 10 year anniversary of The Mother of all financial crashes yesterday, caused by the errrrrrr…..oh yeah? Banks!

      Maybe they should be reflecting on the £23,000 they cost each house hold rather than deflecting the blame on us?

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  2. Property Poke In The Eye

    “Banks States Obvious” should be the headline.

    Estate Agents are the ones who spend the most man hours on a transaction. So should be rewarded accordingly.

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  3. ArthurHouse02

    Not quite sure what is the point in them even conducting this study, what do they have to gain by doing so. Do Lloyds bank have shares in Purplebricks or have the put some money into Emoov etc

    Several things are missing from this list

    Mortgage arrangement fees – sometimes over £1000

    As this is 2011 – Payment Protection Insurance which may have not been declared to the customer costing them thousands and thousands over the lifetime of the product.

    Get your own house in order before criticising others!

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    1. hertsagent13

      My first thought was mortgage arrangement fees. I’ve seen btl deals with 2.5% arrangement fees recently!

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      1. Peter

        Interesting Lloyds do not include mortgage arrangement fees in their figures!

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  4. JonnyBanana43

    The key to high street agency surviving is increasing fees.

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  5. Ric

    oh please. blood boiling moment yet again. 1.8% fee! I will censor this in case your censor system is not working EYE.  Stupid ******* ******** morons.

    At what point will the world be happy…. £0 fee, £0 costs £0 everything for anything in life! ******** hell, how is the economy meant to work. We have to pay for things, so companies can pay staff who can pay for things. Honestly.

    Anyway… headline “Mortgage Interest & Early Redemption Fees by far the biggest cost to moving” **** *****

    argh.

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  6. htsnom79

    So you borrow 200k over 30 years at average 4% over the term, how much interest to the w ankers?

    Ooooh, about 145k ( I think )

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    1. Ric

      Lose your job within your fixed rate period or have a change of circumstance and need to sell and change the mortgage deal…. redemption charge “£3,000 to £7,000” not mentioned that the W ankers. 
      If we replace No Sale No Fee with a Withdrawl fee of sat £995 plus VAT or £1,300 if we did viewings and we would be stoned in the streets.
      Oh…. wait…. charging £995 regardless of selling the property…. wait…. nah…. …. no wait…. nah forget it…. keep thinking someone does a “redemption charge for not selling”… might be wrong. 
      **** *****

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  7. Chris Wood

    If anyone in the ASA or trading standards is reading this, I hope you will have a loud word in Lloyds shell-like.

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    1. wardy

      Informally of course.

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    2. Ric

      I heard a faint slap on the wrist from here Chris.
      ASA “Another Spineless Association”

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  8. htsnom79

    Most agents would have to sell a place at 500k + to make those commissions, and whoever researched survey fees have never heard of eSurv, liking the little epc 60 dribbling along through the years lol

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  9. Ryan Baker

    GUESS WHAT! I feel so sorry for the poor home seller who just sold his house for half a million. The estate agent should absorb the fees …this is unnecessarily putting financial burden on a house owner who just sold his house …..awwwwwww …. Estate Agent selling fees ban is being considered by Shelter ….

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  10. Ryan Baker

    My TSB Banks charges me  £0.56p for any bank transfer we do. This is every flipping transaction from bank to bank. Paying in cash is a further 0.5% charge… no one has ever raised voice for us ….council tax will be charged irrespective of what happens to an individual…yet Shelter won’t come to my rescue. The Government can shaft you dry in taxes and other charges but estate agents should work like charities.

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    1. smile please

      Switch to Metro Bank, Free business banking 😉 

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      1. Cheese.

        ..and Metro Bank are excellent!

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  11. TwitterSalisPropNews53

    (The only two who get sued routinely – surveyors and conveyancers – charge the least.  Herm, increase of fees is on the cards there.)

    Estate Agents – yes, I am hearing more and more calls for a cap on the fee an estate agent can charge, because of arguments such as they face little risk, that Rightmove does the actually selling (especially in cities, e.g London) and that too many agents now just find a buyer and quit during the legals.

    …BUT do remember, Estate Agents can justify their fee, and do so very frequently by…..squeezing £000s more from a buyer, which a private seller would fail to do. ALWAYS use them, and always incentivise them with a decent fee (NEVER go cheap)

    AND …the replies to this post will add more reasons why you should leave the estate agents’ fee alone….here they come:

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    1. Ric

      Only speaking to RM about them “selling my properties” yesterday.
      Asked when the last time they spoke to my viewers, buyers or vendors was and how did they conduct the valuation and measure up effectively? Interestling RM have not had any communication with any of my buyers or sellers. Never knew that… I thought they had a team of “sales people” getting deals done for me.
       

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    2. CountryLass

      To be honest, I don’t really remember looking at the fee for a property until after I had sold it!

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  12. Steps Estate Agents

    Have to agree with Ric, Redemption penalties are £6k plus, and in my area stamp duty is easily around £7,500

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  13. fluter

    Shouldn’t VAT be listed as a separate cost as it is charged by any service provider but then passed to the government. Lets see how the table looks then.

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  14. WiltsAgent

    A business that is only in existence after being bailed out by the taxpayer, you and me. Any report from them is only fit for use as toilet paper.

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  15. GPL

    Aah Yes, the value of a Good Estate Agent…..

    Case No 1 – client who had been for sale with ?av?lls. Was told by that agent after 10 months to accept £435k. I was asked by her solicitor to give my opinion. I said agent was fed up and just wanted fee. So, I listed and then sold 5 months later for £485,000. We can all do the maths. Client thought 1% plus Vat was expensive? despite original agent being 1.25% plus Vat.

    Case No 2 – client with house worth circa £375k thought 1% plus Vat expensive, I asked how much she was paying her painter to paint outside of her house prior to marketing. She didn’t initially know then confirmed it was to be in the region of £3000…. and I said, the fella that doesn’t actually sell your house is getting paid almost as much as me?! I told the client to split off garden land she had and retain, get planning and we would sell that separately later. Forgive me…. was I value for money?

    Case No 3 – 3% plus Vat because we had to do everything, including 100 mile round trip viewings, arrange a removal company and a host of other non-estate agency matters. Was that a fair fee? Absolutely! …..and I didn’t charge anything months later to arrange a secret meeting at my client’s Doctor’s Surgery for Social Services to assist my client who was being physically/financially abused by the relative that she had moved in with. That was just one caring human being helping another.

    My point is Estate Agency Fees are often more than “just the fee”. It’s why the value of a Good High Street Estate Agent is more than just the “percentage”. Banks have a horrendous record in recent times of public service/fees so forgive me for lifting a single digit and pointing it in the direction of this particular bank.

    My honest average fee above a pre-determined minimum is usually 1% plus Vat ……and I and my staff/colleagues earn every single £ of that.

    Any Homeseller who really values their property/asset and the house selling/buying process should employ a decent Local/High Street Estate Agent. Employ a professional and pay a fair fee and in most instances, you (the homeseller), will receive value for money.

     

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  16. watchdog13

    I sold a home using one of the top agents and they charged me over 2.5%. However, they found me an international buyer that paid far more than I had hoped for. Everybody happy.

    The obsession with the percentage is baffling, surely it makes sense to find a firm that can get you the maximum sale price, if you pay a bigger commission but end up with a better sale price, whats the problem?

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    1. Beano200062

      Those with a standard 2 or three bed semi where the market is pretty straightforward, comps are accurate, timescales generally more predictable and chains potentially minimal, may well have an argument for not wanting to pay so much, or feel they are not going to get more value by paying more.

      Agreed with more expensive/exclusive properties a good agent is well worth paying the extra for.

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  17. CaptainObvious

    £200k mortgage at 2% – Interest alone over £50k.

    I think this article is quite clearly wrong and she be removed.

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    1. Ric

      Shouldn’t be removed, we should simply have a new story out lining…

      The single biggest expense when buying a house is the interest paid over the term of the mortgage.

      Nobody has mentioned the product fees for a buyer either! I think £1,000 or so is not uncommon as a standard product fee, let alone add in the FA’s fee.

      W ankers.

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      1. GPL

        You’re liking/enjoying the use of that last word Ric

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        1. Ric

          Haha…

          Absolutely….

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  18. Property Paddy

    I don’t bank with Lloyds Bank, perhaps if they demonstrated a little insight with my industry then perhaps I might consider;

    Oh ! Hang on any one remember black horse estate agents ? Didn’t work out so well for Lloyds in the 80’s

    he he!

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  19. jeremy1960

    And from a buyer’s perspective the largest cost is likely to be an eye watering “arrangement ” fee running into thousands of pounds.  With that money the bank will do very similar checks that letting agents do for a fraction of the cost yet we agents will soon no longer be able to charge for our time/work! Perhaps the next gov/charity target should be to stop these nasty banks charging fees?

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