Household bills you will pay as a homeowner

13 March 2023

If you’re thinking of buying your first home, you may also be wondering what household bills you will pay as a homeowner. 

We spoke to Ken Thomson, Property Partner at Thorntons Law, to discuss the costs of running a house or flat and highlight some of the things to think about when buying.  

Mortgage repayments 

Nearly all first-time buyers need a mortgage to buy their first home, which means you’ll make monthly payments to your lender. This is likely to be the biggest regular outlay you will have to pay as a homeowner. 

The amount you pay will depend on how much you’ve borrowed, what period you’re paying the mortgage back over, and the interest rate. 

A fixed-rate mortgage will mean you pay the same every month, however, if you opt for a variable-rate deal, the amount you pay from month to month could vary as interest rates rise and fall. 

It may be appropriate to arrange life insurance cover while the mortgage is being repaid. This is something your mortgage adviser will discuss this with you. 

Factoring Fees 

Depending on what type of property you buy and its location, you may need to budget for monthly or quarterly factoring fees. 

This covers the management and maintenance of communal areas such as land or gardens, stairways, hallways, and lifts to name a few. It may also include block insurance costs. 

Information about who owns common areas in or around your property and who's responsible for maintenance and associated costs should be detailed in the title deeds which your solicitor will provide details of. 

Home insurance 

Home insurance is an important part of protecting your home against unforeseen events. It can also provide liability coverage for accidents that occur on your property.  

Most policies give you the option to buy buildings and contents insurance combined. 

Buildings insurance 

Buildings insurance covers the cost of repairing damage to the structure of your property. It is essential for homeowners and if you are buying a property with the assistance of a mortgage the lender will insist that the property is insured with effect from your entry date (the date you get your keys). 

If you are buying a flat in a block that is factored or managed, it may be that the factors or managers will arrange and manage a block buildings policy covering all properties in the building. Your solicitor will advise you if this is applicable to you during the buying process.  

Contents insurance 

Contents insurance covers the cost of replacing belongings in your home if they get damaged, destroyed or stolen. This cover is not compulsory, however it is highly recommended. 

You should note that if your property is covered by a block buildings policy, you will still have to arrange your own contents insurance.  

Utility bills and tax 

Gas and electricity 

It’s no surprise that to power your home and keep it warm, you’ll need to pay for gas and electricity. 

To get an idea of how energy-efficient a property is and to find out an estimate of what these bills may be, you can check the property’s Energy Performance Certificate. You will find this as part of the Home Report that’s produced for the property when it’s put on the market. 

Most energy companies will give you the option to pay these bills monthly, every three months, or once a year.  

In the current climate, with energy costs soaring, it’s well worth checking the energy efficiency rating of the property in the EPC and taking note of recommendations to improve energy efficiency and reduce costs. 

Council Tax and water 

Council Tax is a local government charge that applies to all domestic properties. 

Money collected from Council Tax helps to fund services provided by your local authority such as schools, roads, libraries and refuse collection.  

How much council tax you pay is usually determined by what the home was worth in 1991. If the property was built after that the band will have been fixed at the time of the build. Properties are classified in Council Tax Bands and the rate of tax charged varies between local authorities.  

The number of people living in the property and their circumstances may affect how much Council Tax is charged. For example, students, people with disabilities, and single persons may be exempt from Council Tax or entitled to a discount against the full tax.  

The majority of homes in Scotland are billed by their local authority for their water supply and waste water collection services as part of their Council Tax charge. This will not apply to properties served by a private sewerage system or private water supply. 

TV, broadband and phone bills 

TV, broadband and landline phone bills add up and can become a significant cost. Be aware of what you may be tying yourself into before clicking or signing!  

New customers usually get better deals than existing customers, so it's worth shopping around and considering switching to find the best deal each year. 

A TV licence will also be required for you to legally watch or record live TV on any channel, either on a TV, laptop, or other device. Unless you are exempt from payment, this can be paid weekly, monthly, or quarterly. 

Maintenance and other homeowner costs 

Home repairs and maintenance costs are something you will need to be able to finance. The Home Report on any property should give an indication of defects or faults where repairs or maintenance may be required in the short to medium term. 

These costs can vary, particularly depending on the age of the property you purchase, however, it’s worth setting some money aside each month so you’re prepared. Regular maintenance of a property is likely to save money in the long term by avoiding major issues and big bills. It will also help maintain and enhance the value of your property. 

Common types of maintenance include boiler servicing, electrics, decoration, and renovations.  

Ken Thomson, Property Partner from Thorntons Law comments: 

“The aspiration and desire to be a homeowner in this country remains a priority for many.  

“In these days of high living costs, however, it is really important for any house-buyer, and probably most important if you are a first-time buyer, to be able to make a fully informed decision when you offer on a property.  

“All the points mentioned above should be taken into account in making what is likely to be one of the biggest, most exciting, (and most expensive) decisions of your life.  

“You should know that you are operating within your budget, and be able to work out, as best anyone can, that your home will be an affordable asset not just now but in the future.”