Longer, warmer days means summer is on the horizon. Could the summer of 2019 be the time for you to get on the property ladder?
Arguably, there has never been a better time for first time buyers to take the plunge and make that first purchase. There is not one single reason for this but a number of different factors that make it very attractive to kick off your investment in bricks and mortar. I strongly believe that the current generation of first time buyers are more clued up than ever before and can see that a tough market where price growth has stabilised and fallen in some areas, is good news for them and not a market to stay away from.
Interest rates and mortgage lending – there has been a lot of changes to the lending criteria and one of the big issues for first time buyers has been raising a deposit big enough to get on the ladder. With the interest rate remaining very low, mortgage rates have done the same making those monthly repayments more affordable than in years gone by. The access to 90% and 95% mortgages has improved and a number of banks are being very creative with their lending, so you can buy a house with no deposit. A great example of this is the Springboard Mortgage from Barclays which allows the ‘bank of mum and dad’ to assist in giving you that foot up by putting 10% of the purchase price into a Barclays bank account. They lend 100% of the value of the property and as long as mortgage payments are made on time for 3 years, the money is returned to the parents with interest. The Bank of England most recently suggested that interest rates could rise post Brexit which would have a knock on effect with mortgage rates, so it is a great time to commit and fix those mortgage payments.
Help to Buy – more than 420,000 people have used the government Help to Buy scheme to help them buy their first or second home. Although only available on new build homes, it is the opportunity to purchase with a 5% deposit, while borrowing up 20% of the purchase price from the government as an equity loan, which has made this very popular! This is probably one of the main reasons why a lot of national house builders are reporting huge rises in profits.
Stamp Duty – changes in legislation have meant that first time buyers don’t pay any stamp duty on the first £300,000 of any purchase. So, at the current stamp duty charges a saving of up to £5,000 could be made, which is a healthy sum to put towards your deposit or use for home improvements. Just be aware that the stamp duty relief is only available should you be buying up to £500,000, anything over that the normal stamp duty tariffs apply.
The market – the whole Brexit scenario certainly contributed to slowing the market down in 2018 and saw prices drop in some areas and stabilise in others, which has made buying more accessible for first time buyers. There are large volumes of new builds and a good choice of second hand residential homes to buy, allowing you to be selective in where you want to live. There has been a renewed confidence in buyers over the last 2 months, which has seen more properties sell as people have had enough of sitting on their hands waiting for the political turmoil to unfold. So make sure you don’t get left behind waiting to see what happens.
The future – nobody can predict the future as we step into unchartered waters, but a poignant fact to remember is that the average house price in the UK in 1991 was £51,000 compared to 2018 when it was £233,000, a staggering rise of 459%. The world changes but one thing for certain is that buying a home can be like buying a lifestyle and it will enhance how you live on a day to day basis, but more importantly the long term capital growth in putting your money in property has always been rewarding and, in our opinion, will continue be so.
If you are thinking about getting on the ladder or are unsure if it is the right time to do so, we would love help. Whether it is popping into one of our offices for an informal chat and a coffee, arranging a viewing or simply investigating what your mortgage options could be, we would love to help that first time buyer journey be as smooth as possible.
Written by Shaun Stevens, Director of Prospect Estate Agency