The Cost of Moving: The Expenses Buyers, Sellers, Landlords and Tenants Should Think About

Moving property is rarely as simple as agreeing a price and picking up the keys.

Whether you are buying your first home, selling a property, letting out an investment or renting somewhere new, there are usually a number of costs sitting around the headline figure.  Some are obvious.  Others are easily overlooked until they arrive.

In Gibraltar, where property values can be significant and transactions can involve everything from bank finance and legal work to community fees and property maintenance, understanding the wider cost of moving can make a considerable difference.

Here are some of the expenses worth thinking about before making your next move.

For buyers: the purchase price is only the beginning

The most obvious cost of buying a property is, of course, the property itself.  But the amount you need to have available is likely to be greater than the deposit you are putting towards the purchase.

Mortgage costs can include arrangement or valuation fees, depending on the lender and the mortgage product.  There may also be costs associated with arranging the finance itself, so it is sensible to establish the full cost of borrowing rather than looking only at the monthly repayment.

Legal fees are another important consideration.  Your lawyer will need to undertake the necessary searches, review the title and documentation, advise you throughout the transaction and deal with the legal work required to complete the purchase.

Depending on the property and your circumstances, there may also be stamp duty or other government charges to take into account.

Then there are the less formal costs.  You may want a survey or specialist inspection before committing to a purchase, particularly with an older property.  You may need to budget for furniture, appliances, decorating or relatively minor works once you move in.

And finally, there is the actual move itself.  Removal costs, storage, cleaning and the inevitable collection of things you suddenly realise you need can add up surprisingly quickly.

The useful question is therefore not simply “Can I afford this property?” but “What will it cost me to buy it and get it to the point where I am comfortably living in it?”

For sellers: selling has a cost too

It is easy for sellers to focus on the amount they hope to receive from their property and forget that there are costs involved in getting from the decision to sell to the money arriving in the bank.

There will normally be legal costs associated with the sale, and there may be outstanding charges or documentation that need to be dealt with before completion.

There can also be costs involved in preparing the property for the market.  Sometimes that means little more than a thorough clean and some decluttering.  In other cases, there may be decorating, repairs, gardening or other work worth undertaking before photography and viewings.

But arguably the biggest potential cost for a seller is not a bill at all.

It is getting the price wrong.

A property launched at an unrealistic price can sit on the market while potential buyers move on to newer instructions.  Over time, the property can begin to look stale, leading to price reductions and a longer selling period.

That can have a financial cost in its own right.  There may be mortgage payments, community charges, maintenance and other expenses continuing while the property remains unsold.  And if you are buying another property at the same time, a delayed sale can have consequences further down the chain.

Good preparation and realistic pricing are therefore not simply about making a property look attractive.  They can be part of controlling the overall cost of selling.

For landlords: the rent isn't the whole return

For landlords, the calculation is slightly different.

A property producing £1,500 a month in rent does not necessarily generate £18,000 a year in net income.

There can be community charges, rates, insurance, maintenance, repairs and management costs, depending on the property and how it is being operated.  Landlords also need to consider the costs associated with keeping the property compliant and properly maintained.

Then there is the cost that can be particularly easy to underestimate: void periods.

A property that is empty for a month while a tenancy ends, the property is prepared and a new tenant is found has effectively lost a month's rental income.  If repairs or refurbishment are required between tenants, the period can be longer.

This is why the highest possible headline rent is not necessarily the only consideration when assessing an investment property.

A realistic rent, good tenant selection, sensible management and keeping the property in good condition can all contribute to reducing the periods when the property is producing no income.

Landlords should also remember that properties cost money even when they are empty.  Mortgage payments, community charges and other ongoing expenses do not necessarily stop simply because there is no tenant paying rent.

For tenants: £1,500 rent doesn't necessarily mean £1,500 a month

Tenants can face a similar issue when looking at rental properties.

The advertised rent is the obvious starting point, but it is worth establishing the actual monthly and upfront cost before deciding whether a property fits your budget.

There may be a security deposit to pay at the start of the tenancy, along with the first rental payment and potentially other agreed costs associated with moving in.

Then there is the cost of moving.  Removal companies, transport, cleaning and storage can all become expenses, particularly if you are moving between properties rather than simply moving a few streets away.

There is also the question of furnishing.

A property that is fully furnished may require little additional expenditure.  An unfurnished property may initially appear attractive because of the rental price, but the cost of beds, sofas, tables, appliances and everything else needed to make a home can quickly run into thousands.

It is therefore worth looking beyond the monthly rent and asking what the property will actually cost you over the first six or twelve months.

Look beyond the headline number

One of the common threads running through buying, selling, letting and renting is that the headline figure rarely tells the whole story.

A buyer looking only at the purchase price may underestimate the cost of completing and furnishing the property.

A seller focusing solely on the asking price may overlook the financial consequences of a property taking months longer to sell.

A landlord looking only at the monthly rent may fail to account for maintenance and void periods.

And a tenant comparing properties purely by rental price may not appreciate the difference between a furnished home that is ready to move into and one that requires a significant initial outlay.

None of this is intended to make moving sound complicated. It is simply a reminder that property decisions are easier when you understand the numbers in their entirety.

The best decisions tend to come from looking beyond the price on the particulars and considering what the property will actually cost you — to buy, sell, own, let or live in it.

In a property market where the numbers can be substantial, knowing the full cost before you commit is rarely money wasted.