As the average property now costs seven times the average industrial wage, the last thing aspiring first-time buyers need is exorbitant legal fees to put home ownership even further out of their reach.
A new "total solutions provider" for the first-time buyer, ezhome, launched last week with promises of huge savings and an all-inclusive service for clients. Ezhome's entry into the market demonstrates how much fat there is to be trimmed off legal costs.
On a £150,000 (€190,500) home, a purchaser could expect to pay £1,600 plus VAT to their solicitor in professional fees, plus another £600 to £700 for legal outlay. The conveyancing fee is calculated as a percentage of the purchase price, generally 1 per cent, with a £100 fee on top of this.
Other costs are added to this including a land registration fee, stamp duty on documents and the costs of searching for documents.
The Consumers' Association of Ireland has criticised the high cost of conveyancing and believes consumers should be allowed under the law to manage conveyancing of their own property themselves. Tying conveyancing fees to the cost of the property has meant solicitors in many cases have doubled their fees in a few years.
By shopping around or negotiating, clients may see the conveyancing fee reduced to 0.75 per cent and the £100 fee dropped. But many first-time buyers will be meeting a solicitor for the first time when they find a property and may not be aware that bargaining is possible.
Ezhome is offering an all-in charge of £675 including VAT, regardless of the price of the property for the principal direct costs in buying a home including conveyancing, valuation, and survey costs. The customer only pays for the service after the purchase is complete.
However, this price does not include land registry, stamp duty, search fees and other legal outlay which can add up to another £600 plus VAT.
REA Mortgage Choice is another firm providing a package of services to first-time buyers. The company charges a flat fee of £1,495 plus VAT, but it refunds the commission it receives from the mortgage provider to the client.
Depending on the commission structure of the financial institution the purchaser opts for, they can be refunded up to £1,350 for a 90 per cent mortgage on £150,000. REA Mortgage Choice keeps the flat fee and includes all the legal costs for that price.
There's no doubt that finding and purchasing your first home can be difficult, confusing, as well as costly. But as new business models which coordinate the legal and financial sides of the process emerge, first-time buyers should expect a little more assistance in their quest.
