A new study from Post Office Money has found that both renters and buyers are using the majority of their cashable savings to cover the cost of moving.
According to their analysis, renters need to have an average of £1,469 saved to cover the costs of moving including the security deposit (£944) and moving costs (£525) and on average have £1,5223 in cashable assets available to them. However, 53% of 22 to 29-year-olds saved no money in a savings account, so many young renters will have no savings set aside to cover these costs at all.
Buyers, meanwhile, will need to budget an additional £10,132 to move home, with estate agent fees making up a third (33%) of that cost (£4,815). However, 80% of prospective home buyers underestimate the additional costs of moving, budgeting for less than half of the actual cost on average (£6,782 of £10,132) which could see them dip into their savings.
The cost of moving has increased by 25% for a home buyer and 13% for renters over the past decade. However, upcoming changes such as those made in previous Budget announcements by the Chancellor, may see costs ease for both buyers and renters
Cost of moving as a renter
Moving can place significant financial pressure on renters, with deposits accounting the bulk of the cost of moving as a renter (64%), £944 on average, ranging from £1,629 in London to £526 in the North East. While renters will expect to see these costs refunded at the end of their tenancy, they will likely need to wait until after they have moved out to recoup the cost. As such, renters who do not want to deplete their savings will need to set money aside specifically for their next deposit in order to make a move.
But there is some hope for renters, the Government has proposed a ban on letting agent fees under the Tenant Fees Bill, which is likely to come into effect in 2019. Agency fees make up a significant amount of the cost of moving as a renter (16% - £235).
Cost of moving as a buyer
Even after years of experience moving as a renter, people are can still be underprepared for the additional costs of moving if they decide to buy a home. Significant costs include stamp duty fees (£2,019) and estate agent costs (£4,815). Over the past ten years these additional costs have increased by 30%, but buyers are not currently budgeting more to cover the increased cost.
Chrysanthy Pispinis, Post Office Money says: “Moving can be a time of financial pressure and people will often need to draw upon any savings they have. However, they are unlikely to have ear-marked this money specifically for moving, leaving them with no financial safety net. Having a regular savings habit – putting money aside on a 'little and often' basis - can help with these unforeseen costs.
To ensure they can meet the demands of moving without damaging their nest egg, movers should consider these costs in advance as much as possible. The Government has made some accommodations recently, such as the Tenant Fees Bill and recent stamp duty changes; we hope these revisions will ease the cost of moving for both renters and buyers.”
Tips for moving buyers and renters:
Budget in advance: Many people will wait until the point that they move to reckon with the costs of moving home – whether they be buyers or renters. In fact, one in five buyers will not consider common moving costs at all. Making an itemised checklist of potential moving costs and making sure you budget for these well in advance is essential to making sure you have enough set aside.
Consider letting or estate agent fees: The fees charged by letting and estate agents differ significantly, so consumers can massively benefit from shopping around. There are alternatives to high-street agents which can often greatly reduce the cost for cash-strapped movers.
Make sure to get a number of quotes: When enlisting a removal service or a self-drive van hire for moving day, be sure to get a number of quotes from different companies; you may be able to get a cheaper deal or even use them to negotiate a better price.
Cut down on removal costs: Movers can save money by sourcing moving materials second hand, such as asking their local supermarket for discarded cardboard boxes rather than buying expensive moving packs. Another way to reduce these costs is to cut down on the amount of items you are moving, by having a 'moving clear-out' and disregarding any items which you do not need.