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The household bills you'll pay as a homeowner

Discover the household bills and maintenance costs you need to budget for when you buy your first home.

In this article
Buildings insurance Mortgage repayments Gas and electricity bills Water bills Contents insurance Council tax
TV, broadband and phone bills TV licence Service charges and ground rent in flats Home repairs and maintenance costs Parking charges Transport costs

As a homeowner you'll be responsible for a number of household bills and expenses that you might not have had to cover while you've been renting.

Here, we look at the costs of running a house or flat when you own it, including all the bills you'll need to budget for before taking the plunge into home ownership.

Buildings insurance

Buildings insurance covers the cost of repairing damage to the structure of your property. 

This isn't an optional extra but a must-have - in fact mortgage lenders will require you to have a policy in place from the date you exchange contracts in order to give you a home loan.

The only exception is if you're buying a leasehold property, in which case insurance should usually be included in your service charge.

Mortgage repayments

Nearly all first-time buyers need a mortgage to buy their home, and this will mean making monthly payments to the lender.

Your payments will partly go towards repaying the loan, and partly to cover the interest. 

The amount you pay each month will be determined by how much you've borrowed, what period you're paying the mortgage back over (the mortgage 'term'), the interest rate and whether you're also paying off any fees.

If you have a fixed-rate mortgage, your payments will be the same each month for the duration of the deal period (often two or five years). However, if you have a variable-rate deal such as a discount or tracker mortgage, the amount you pay from month to month could vary.

Whichever type of mortgage you choose, make sure you remortgage at the end of the introductory period to avoid being transferred onto a more expensive rate.

 

 

Gas and electricity bills

Your gas and electric bill will cover the cost of powering your home and keeping it warm. Most energy companies will offer several payment options and you can choose to pay either quarterly, monthly or annually.

In theory, your energy bill should rise with inflation but a number of suppliers increase charges at a much faster rate. It’s really important that you keep an eye on how much your energy bill is costing you and switch if you’re paying too much.

When you’re viewing properties they’ll each have an energy performance certificate. This will help you see how energy-efficient the building is and give an indication of how much your bills might be. There are steps you can take to save on your energy bill once you move in, too.

Water bills

According to Water UK, the average household water and sewerage bill is £405 a year, or £33.75 a month. 

Water rates vary though and will depend on where you live and the availability of water in your area.

The amount of water you actually use will only affect your bills if your home is fitted with a water meter - generally speaking, if you have fewer people living there than the number of bedrooms, it's worth looking into getting a meter fitted.

Unlike with gas and electricity, you can't switch water supplier because they are allocated depending on where you live.

Contents insurance

Contents insurance covers the cost of replacing your belongings if they are damaged, destroyed or stolen. You don't have to have contents insurance but it's advisable.

People often combine contents insurance with their buildings insurance (this is referred to as home insurance) but you can buy it separately instead if you like.

Council tax

Properties are classified in bands ranging from A to H and, as strange as it might seem, the price you pay is usually determined by what the home was worth in 1991. 

The seller or estate agent should be able to tell you which band your new home is in, or you can use the government website to look it up online. Once you know which band you're in, you can use our council tax calculator to see how much you'll pay.

If you think your property is in the wrong council tax band and you're paying too much tax, you can appeal against your banding. But be aware that the council could decide to move your property into a more expensive band rather than a cheaper one, so you should only appeal after carefully researching what your neighbours are paying. 

You can also apply for a 25% discount if you live alone or if the property is empty. 

TV, broadband and phone bills

TV, broadband and landline phone bills can take a significant chunk out of your budget. Usually, new customers will get better deals than existing ones, so it's worth shopping around and considering switching to find the best deal each year. 

In October 2017, we surveyed more than 2,000 people about their haggling experiences and found that people can save an average of £725 a year if they negotiate with their supplier - with 86% of hagglers getting a better deal on their broadband and TV.

TV licence

A TV licence legally allows you to watch or record live TV on any channel either through your TV or through a website. You’ll need a TV licence whether you use Freesat, Freeview or a pay-TV service in your home and whether or not you watch BBC channels.

Since 2016, changes in the law have meant that you need a TV Licence to watch or download on-demand or catch-up programmes on BBC iPlayer too.

The TV licence costs £154.50 a year for a colour TV and £52 for a black and white TV. You can pay it all up front or in weekly, monthly or quarterly instalments.

People aged 75 and above are currently entitled to a free TV licence, but from 1 June 2020 only those aged 75+ who receive Pension Credit will qualify.

Service charges and ground rent in flats

If you're buying a leasehold flat, you'll have to factor in monthly or quarterly service charges and ground rent. Service charges cover the management and maintenance of the building's communal areas and tend to cost between £100 and £200 a month (but this can vary).

Most freeholders appoint managing agents to look after communal areas, so these fees may be combined into one payment.

Make sure your property solicitor looks over the lease very carefully before you buy a leasehold property, as some can contain punitive clauses and spiralling ground rents.

Home repairs and maintenance costs

Whether it's a boiler breakdown or replacing your kitchen, you'll need to be able to finance the costs of repairing and maintaining your home. 

These costs vary from one property to another and it's always worth setting money aside each month so that you're prepared if you're hit with unforeseen expenses. 

Here are some of the most common types of maintenance that you should factor into your budget:

  • Boiler servicing: it's worth getting your boiler serviced once a year - when you come to sell your home some buyers will ask about this.
  • Electrics: you should get your electrics safety-checked every five to 10 years.
  • Decoration: cosmetic changes, such as painting and decorating rooms, will also generally need to be done every five to 10 years. 
  • Renovations: more major renovation work, such as replacing kitchens and bathrooms, might be done every 10-20 years. 

Parking charges

If you don't have a garage, driveway or free on-street parking, you might need to budget for a residential parking permit. 

These parking permits don't always guarantee a parking space, but they do enable you to park in resident-only parking bays within a certain distance of your home. 

The cost of these permits will vary depending on the area you're in.

Transport costs

If you don’t drive, you'll need to take the cost of public transport into account when you're choosing where to live.

The reliability of trains is something to consider as well, especially if you live near one of the UK's most disrupted train stations

Our analysis of the best and worst train companies revealed that Southeastern, Southern Railway and Thameslink are among the worst in the country. 

 If your train ever gets delayed or cancelled, be sure to claim delay repay compensation.

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