British budgeting skills give homebuyers the blues

100 per cent of British house movers go over budget as a result of poor planning and failing to set aside sufficient funds to cover the cost of moving home, according to new research by FindaProperty.com.

A massive nine out of ten people overstretch their finances, adding an additional £20,000 to their initial costs, while one in five admit to overspending by up to a whopping £50,000 when buying a new home.

Misjudged renovation costs are the biggest factor. Nearly half (46%) said they blew their budget on DIY and improvements, whilst a third of people go over on stamp duty and legal fees as a result of bad budgeting.

The top five biggest budget killers for home buyers are:

1) Renovations
2) Stamp duty
3) Legal fees
4) Furniture
5) Removal costs

However, home buyers are not alone in overspending - over three quarters (77%) of people renting a new pad go over by up to £500 and eight per cent exceed £1000. The deposit and agency fees are the biggest issues with nearly half of people going over on both these costs. Removal costs, council tax and buying new furniture were also named as major factors in taking people beyond their financial means.

“Failure to plan and set aside sufficient cash could spell financial trouble” says Mike O’Flynn, property expert at FindaProperty.com. “Unlike other financial matters, when it comes to searching for a new home, buyers are led by their hearts - not their heads. If you’re considering renovating a potential new home, it’s important to get professional quotes so you understand the full costs involved, before taking the plunge and making an offer”.

Whilst 70 per cent are undeterred by escalating costs, claiming money worries are part and parcel of moving, property seekers are increasingly demanding more information. Two thirds look to estate agents and property portals as a first point of call, ahead of magazines or government bodies, for advice and guidelines on how to keep rising costs down to a minimum.

The following golden rules from Mike O’Flynn, FindaProperty.com’s property expert, outline the minimum funds buyers should set aside to adequately cover the costs of their new home:

Renovations – Be realistic when planning your dream home. If you walk into a house and are immediately planning a new kitchen and bathroom refit, then factor this in. Minimum to budget: from £5,000 upwards

Stamp duty – A non negotiable part of purchasing a home and a cost many first time buyers forget to factor in. Minimum to budget: based on average house prices this can vary between £2,161, in the South East for example, to a staggering £9,489 in London

Legal fees – These tend to vary on a sliding scale, dependent on the value of your new home. Minimum to budget: from £550, though this could raise to a few thousand on more expensive properties

Furniture – The one subjective cost you can directly influence. Remember that your interior décor can be built up and added to over time. Don’t try to cover everything in a one stop shop. Minimum to budget: for basics - bedroom and living room furnishings as well as kitchen appliances - from £3000

Removal costs – Removal companies increasingly offer tailored services, taking into account your budget, size of your home and distance to travel. Approach them honestly and ask their advice. Minimum to budget: from £200 - £1000

Keep a few pennies in the kitty – It’s a good idea to set money aside for local searches and land registry fees, building and contents insurance, in addition to basic moving in costs such as plumbing in the washing machine, new keys, redirecting mail – and of course your moving in party! Minimum to budget: from £300 upwards