What Are Disbursements?

When buying a house, you’ll encounter a range of costs – some obvious like your deposit and mortgage fees, others less visible but equally important. Among these hidden expenses are disbursements, those essential fees that often catch buyers off guard if they’re not properly prepared. 

But what are disbursements, exactly? 

In simple terms, they’re the behind-the-scenes costs that keep your property purchase moving forward smoothly. 

Asking “What are disbursements when buying a house?” is crucial because these fees can add thousands to your overall costs. From mandatory legal searches to government taxes, disbursements form a significant part of any property transaction. 

Many buyers focus solely on the purchase price and mortgage, only to be surprised when additional bills arrive from their solicitor. This comprehensive guide will walk you through every aspect of disbursements, including VAT on disbursements, helping you budget accurately and avoid any nasty financial surprises. 

What is a disbursement?

Disbursements represent all the third-party payments your solicitor or conveyancer makes on your behalf during the property buying process. These aren’t fees for your solicitor’s time or expertise – those are separate charges. Instead, disbursements cover the essential administrative and legal tasks that must be completed before you can legally own your new home. 

The key characteristic of disbursements is that they’re pass-through costs. Your solicitor pays these fees to various organizations first, then recharges them to you. This system exists because many of these payments need to come from a legal professional rather than directly from the buyer. For example, local authorities typically only accept search requests from qualified conveyancers. 

A common misconception is that all solicitors’ fees are disbursements. In reality, your legal bill will typically show two distinct elements: the solicitor’s professional fees for their time and expertise, and the disbursements they’ve paid on your behalf. Understanding this distinction becomes particularly important when considering **VAT on disbursements**, as we’ll explore later in this guide. 

What are disbursements when buying a house?

While the exact disbursements you’ll pay depend on your specific property and circumstances, certain fees are nearly universal in property purchases across England and Wales. Let’s examine each of these in detail: 

Local authority searches (£250-£400)

These comprehensive checks form the backbone of your property due diligence. Your solicitor will submit a CON29 form to the local council, requesting information about: 

– Current and historical planning permissions affecting the property 

– Any enforcement notices or breaches of planning control 

– Road schemes or traffic management plans that might impact access 

– Conservation area status or tree preservation orders 

– Proposed nearby developments that could affect your enjoyment of the property 

The cost varies significantly by location, with London boroughs typically charging more than rural districts. Some solicitors offer optional additional searches covering issues like common land or public paths, which can add £50-£100 to your total. 

Land Registry fees (£20-£910)

When ownership transfers to you, this must be officially recorded with HM Land Registry. Their fees work on a sliding scale based on the property’s purchase price: 

For properties worth up to £80,000, you’ll pay just £20. This rises gradually to £910 for properties valued over £1 million. First-time buyers should note that even with stamp duty relief, Land Registry fees are calculated on the full purchase price. 

Bankruptcy searches (£2-£4 per person)

If you’re using a mortgage to buy your home, lenders require these checks to confirm neither you nor any co-purchasers are currently bankrupt. For a couple buying together, expect to pay around £4-£8. These searches are conducted through the Land Registry’s bankruptcy database and are valid for the duration of your transaction. 

Environmental searches (£30-£50)

These reports assess potential environmental risks that could affect your property’s value or safety. They include: 

• Flood risk assessments (particularly important given increasing flood events) 
• Historical land use that might indicate contamination 
• Ground stability issues in areas with mining history 
• Radon gas potential in affected regions 

While not technically mandatory, most mortgage lenders insist on these searches before approving your loan. Even cash buyers would be wise to invest in this relatively inexpensive due diligence. 

Stamp duty land tax (£variable)

The biggest disbursement for most buyers, SDLT is calculated on a sliding scale. Current rates for residential properties are: 

– 0% on the first £250,000 (£425,000 for first-time buyers) 

– 5% on the portion between £250,001-£925,000 

– 10% on £925,001-£1.5 million 

– 12% on anything above £1.5 million 

Additional properties attract a 3% surcharge on each band. Your solicitor will calculate and pay this tax on your behalf within 14 days of completion. 

Telegraphic transfer fees (£20-£50)

On completion day, your solicitor transfers the purchase money to the seller’s solicitor via same-day bank transfer. Most banks charge a premium fee for this service, which your solicitor will pass on to you. Some firms absorb this cost as part of their overall fee structure.

Do I pay VAT on disbursements?

The treatment of VAT on disbursements often causes confusion among homebuyers. Understanding the rules can help you spot incorrect charges and potentially save money. The key principle is that true disbursements – where your solicitor acts purely as an intermediary – shouldn’t have VAT added. 

What counts as a true disbursement?

Genuine disbursements that shouldn’t include VAT are payments where: 

1. Your solicitor acted as an agent in making the payment
2. You were the actual recipient of the service 
3. Your solicitor didn’t benefit from the service 
4. You authorised the payment to be made 

Examples include: 

• Local authority search fees 
• Land Registry fees 
• Bankruptcy searches 
• Environmental search fees 

When VAT applies…

Your solicitor’s own professional fees always attract VAT at the standard 20% rate. Some firms may also bundle certain costs in ways that make them subject to VAT. For instance, if your solicitor orders a search but adds their own administration or interpretation of the results, this combined service would include VAT. 

How to check your bill

Always request an itemised breakdown of costs. If you see VAT being charged on what should be true disbursements, query this with your solicitor. For example, if a local search cost £300, you should pay exactly £300 – not £300 plus VAT. 

How to budget for disbursements

With disbursements potentially adding £1,000-£3,000+ to your buying costs, proper budgeting is essential. Follow these steps to avoid financial surprises:

1. Get detailed quotes early

Ask potential solicitors for a complete breakdown of anticipated disbursements specific to your property. Don’t settle for vague estimates. 

2.Understand regional differences

Research typical costs in your area. For example, mining searches in former coal regions like South Wales may add £60-£120. 

3. Factor in all potential fees

Beyond the standard disbursements, consider:

• Leasehold supplements if buying an apartment (£100-£300)
• Chancel repair liability checks in certain areas (£20-£50)
• Additional local searches if near water or protected land

4. Build in a contingency

Set aside 10-15% extra to cover unexpected disbursements that might arise during the transaction.

5. Ask about payment timing

Some disbursements are paid early in the process (like searches), while others (like SDLT) come at completion. Plan your cash flow accordingly.

The risks of cutting corners on disbursements

Some buyers consider skipping certain disbursements to save money, but this can be a false economy. Consider these risks: 

1. Financial consequences

• Missing a local search might mean not discovering a planned development that could devalue your property
• Skipping environmental checks could leave you unaware of flood risks that affect insurance costs

2. Legal implications

• Without proper searches, you might inherit unresolved planning violations
• Missing bankruptcy checks could jeopardise mortgage approval

3. Practical problems

• Incomplete paperwork can delay completion
• Lenders may refuse to release funds without all required searches

In our extensive experience, buyers who try to minimise disbursement costs later regret it due to issues that emerged after purchase.

Are there disbursements when selling a house too?

If you’re selling a property to fund your next purchase, you’ll face your own set of disbursements – though typically fewer than when buying. These seller costs often include:

• Energy Performance Certificate (£60-£120) (Required before marketing your property)
• Leasehold pack (£200-£500+) (For flat sellers only – the biggest seller disbursement)
• Mortgage redemption fee (£50-£300) (If you’re paying off a home loan)
• Bank transfer fee (£20-£50) (For sending your sale proceeds)

But here’s the key difference: While buyers can’t avoid most disbursements, sellers have options. Traditional sales involve all these fees, but alternative routes like selling to a cash buyer can eliminate nearly all of them.

A smarter strategy for your property journey

When buying, disbursements are unavoidable, but you can dramatically simplify (and often eliminate) the disbursements involved in selling.

This is where Sell House Fast makes the difference. We’ve helped thousands of sellers navigate this process with:

• Zero seller disbursements – we cover all fees including EPCs and leasehold packs
• Your personal property manager – one dedicated expert from offer to completion
• Speed without stress – typically complete in 7-21 days, at your pace
• 100% sale certainty – guaranteed funds with no last-minute surprises
• No estate agent fees – putting an extra 1-2% back in your pocket

We understand every move is unique. That’s why we tailor our approach to your timeline and needs – whether you’re downsizing, relocating or just want a simpler sale.
Want to explore your options? Contact our friendly team for a no-obligation chat about your situation and your free cash offer. We’ll help you compare the numbers and decide what works best for your next chapter.