Finance

What are your first year costs?

Now you have the keys to your first home, it’s not just the mortgage you have to pay each month. Kay Hill runs through the bills you can expect in your first year and has tips for keeping costs down

Council tax
What you pay: The cost depends on the value and amenities of your home and which council you pay. Homes are banded from A (the lowest) up to H, with the average being a band D. The amount varies wildly around the country and bears no relation to property prices. Although the average is £1,591 a year, the cheapest places in the country are Westminster (£688), Wandsworth (£700), City of London (£931) and Kensington & Chelsea (£1,077), while the dearest are Weymouth (£1,891), East Dorset (£1,861), Purbeck (£1,852) and Nottingham £1,852).

Can you reduce it? There’s no getting out of Council Tax; anyone over 18 has to pay, whether you own or rent your home. There are some discounts available – if you live alone, or share your house with someone who is exempt (such as a full-time student or mentally disabled person) you can get a 25% discount. It is also possible to appeal the banding, but you have to prove that similar properties nearby have a lower band, and only around one in five appeals
is successful.

Home insurance
What you pay: The average cost for buildings and contents insurance is around £260 a year. Your mortgage company will insist on buildings cover; contents cover is not compulsory, but imagine the consequences of losing everything you own in a fire!

Can you reduce it? If your property is leasehold then you won’t normally need to buy buildings insurance as the freeholder will organise it (but do make sure). A larger excess (the first part of any claim that you pay yourself) reduces premiums, but make sure you can afford it. For buildings insurance, remember that rebuilding costs are cheaper than purchase prices as you don’t have to buy the land (you should find the figure on your mortgage valuation or deeds). Never auto-renew or just accept your mortgage company’s quote without shopping around, and consider buying through a comparison site for cashback or bonuses like cheap cinema tickets.

Utility bills
What you pay: The average energy bill (gas and electric) is £1,123 a year and the average water bill is £405 a year (Ofgem/Consumer Council for Water)
Can you reduce it? With gas and electricity you can choose your supplier (there are more than 60), so shopping around is vital. According to watchdog Ofgem, the difference for an average customer between the highest and lowest annual tariff (£1,135/£827 per year) is £308. In general, you will save money by paying monthly, taking gas and electricity from the same supplier and managing your account online. The biggest savings are from cutting what you use – do you remember how when you were a teenager your parents used to nag you to turn the lights off, stop leaving the TV on, put a jumper on instead of turning the heating up? Well there was a good reason for all that… You can’t shop around for water, but if you have moved into an older home without a water meter, if there are more bedrooms than there are people living there, you will probably save money by having one fitted. If you have a meter, try to run dishwashers and washing machines only when full, and invest in a water butt to collect rain for watering plants and washing cars.

Broadband, phone and TV
What you pay: A TV licence is £150.50 a year, and you need to pay it even if you have a satellite package and never watch the BBC. According the Office of National Statistics, most households spend an additional £220 a year on satellite, cable or subscription TV, plus around £884 a year on phones and internet.
Can you reduce it? Do you need hundreds of satellite channels, or would a much cheaper subscription service keep you happily in box sets for the year? Do you need ultra-high-speed broadband, or would a regular service be sufficient? Do you even need a landline? Mobile phones can be a money pit – check the amount of data and calls you actually use to make sure you’re on the right tariff. Consider whether you need an iPhone X at £110 a month when you could get an SE on the same tariff for under £30 a month or a dull but serviceable cheapie for £7.50 a month?

Furniture and furnishings
What you pay: According to the Office of National Statistics, the average household spends £1,300 a year on furniture and household goods.
Can you reduce it? Yes of course you want everything to look lovely in your new home, but the main thing is to pay that mortgage, so don’t get tied up in loans for furniture. Check out Facebook sales, recycling groups, eBay, charity shops, boot sales and jumble sales – that tatty old sofa might look great with a new throw and some cushions. Don’t look down your nose at cast-off curtains or junk shop chairs; you have the rest of your life to get things the way you like it!

Repairs and maintenance
What you pay: According to the Office of National Statistics, the average household spends around £447 a year repairing their house.
Can you reduce it? You need to upskill, and fast! Buy a good DIY book, or see if your local council’s waste and recycling team offers workshops in basic skills. Tap into the knowledge of parents and grandparents who can show you how to fix it up or sew it up. Remember that you shouldn’t mess with gas or electricity unless you’re qualified, but you most certainly can learn to put up a shelf, fill a crack, or fix a leaking tap, and it will save you a fortune.

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