In all likelihood, many prospective buyers in the market are about to be priced out of their purchase, if not choosing to abandon their hunt altogether because of the looming recession. 

It’s a heady cocktail of external and internal pressures, something likely to encourage risk-taking behaviours and rushed, easily avoidable mistakes. As property professionals, it is our responsibility to identify such risky behaviours and equip our clients with an education about the purchase process they are undertaking so they make the best-informed decisions, right for their financial position. 

The knock-on effects of rising interest rates 

The UK recently hit an inflation rate of 9.4%, the highest in 40 years, and since December last year, interest rates have risen from 0.25% to 1.25%. With rising interest rates leaving many mortgage payers at risk of having to fork out higher repayments each month, we must be mindful that many buyers could become distracted and look at these additional payments alone, forgetting that budgeting for a higher mortgage may leave a gap elsewhere in the financing of their home. 

For example, if buyers are choosing to borrow more and more to purchase their dream home, are they being realistic about the necessary changes they will need to make elsewhere in their lives? From budgeting for home improvement activities like installing new bathrooms, to holding off on that car upgrade, these are all considerations that must be realistically taken into account. If a client saves one boiling pot from bubbling over, it won’t make what’s in the oven stop burning. 

As property professionals, it is our responsibility to advise our clients with enough insight to be equipped against rushed and ill-thought through decisions, and instead to make considered and efficient purchases. Other than increasing mortgage rates then, what potential costs must our clients be aware of? 

Key processes that buyers should undertake 

Buyers often lack a full picture of the total costs involved in purchasing a house. Too few, for example, are undertaking professional survey reports before completing their purchase. Whilst these reports do incur an up-front cost, this is a small investment compared to the thousands of pounds that could have to be paid for repairs if a survey on a newly purchased property is not undertaken. Few know a mortgage survey, for example, is a valuation carried out for the bank and will not identify the same details as a home buyer’s survey. 

If left unaccounted for and later surveys must be undertaken, costs can spiral as buyers discover there is a variety of additional reports. These reports can be: drain reports; roof reports; damp and timber reports, etc. Additionally, and a common victim of misconception, gas and electricity reports must be paid for buy the purchaser, except in sales where works have been carried out. 

Lastly (though it should be noted this article is more of a highlights reel than exhaustive checklist), when purchasing a leasehold clients must budget

 for costs payable to a landlord and/or management company. Indeed, often separate fees are needed to serve notice to both parties. Remaining mindful of such drains on budgets, and investigating the price at the earliest possible venture, will batten down the hatches against nasty surprises. 

The power of the right advice 

With mortgage rates only set to increase and the housing market continuing at lightning pace, many prospective buyers are feeling the strain. The 

factors within buyers’ control in a purchase, then, should work to mitigate avoidable risks and costs. 

With the right advice early on, they can. Every prospective buyer will be different, but the tools and knowledge they need to be equipped with is not – and that part is up to us. 

Linda Kirk is co-founder and director in conveyancing, and Kieran Egan is practice manager, both at Adkirk Law