First time buyers shrug off Brexit as Help to Buy government schemes, Stamp Duty exceptions and cheap mortgage deals boost home buying

A growing number of first-time buyers are shrugging off uncertainty surrounding Brexit and following their dreams, to owning their own home. Help to Buy schemes, stamp duty exemptions and cheap mortgage deals are giving new buyers the boost they need to get on that all-important property ladder. In November, there were 36,200 new first-time buyer mortgages completed marking 5.8% increase from the same point a year earlier UK, according to UK finance. The first-time buyer market is finally booming, with £6 billion lending providers to first time buyers in November alone.

The average loan taken out by first-time buyers in November was £142,000, up from £138,000 in November 2017 and the average first-time buyer is 30 years old with a household income of £42,000. The recent research into the market shows first-time buyer demand and actively has held up surprisingly well, with aspiring buyers clearly not losing the ambition to purchase their own home, despite the Brexit uncertainty. So it could actually be the best time for potential homeowners to make their move, given the strong appetite to lend in this part of the market and there is some very attractive pricing available, with very low interest rates.

These figures show Brexit uncertainty hasn’t prevented first-time buyers from grasping the opportunity to step foot on the housing ladder. The reality is that there are good deals to be had and many first-time buyers are taking advantage of government schemes such as Help to Buy. Introduced in 2013, Help to Buy programs allow first time home buyers to qualify for mortgage loans by making down payments as small as 5%.

Check out our top tips below, so you can join hundreds of first-time buyers jumping on the property ladder this year. 

1. Save long and hard for that deposit If you’re planning to buy a home, you’ll need to save for a deposit. – Open a Help to Buy ISA. As long as you‘re over the age of 16 and have a National Insurance number, you can take advantage of a tax-free savings account aimed specifically at buying your first home. The government will even give you a 25% bonus once you’ve made the purchase .

– Take advantage of stamp duty exception. Being a first-time buyer means the government will wave your tax for purchasing. As long as your property costs less than £300,000, you can save a significant amount. Don’t forget though, you’ll still need to pay solicitors, surveyors and financial advisors.

2. Seek professional financial help advice Buying a property can be very daunting for a first time buyer. It can become quite confusing, so it is highly recommended that you seek expert advice to help you through the process.

– Work out what you can afford to buy. Mortgage advisors are able to tell you how much you can borrow and therefore how much you’ll be able to spend. If you don’t find this out before viewing, you could be looking at properties out of your budget.

– Show vendors and estate agents that you’re ready to buy. If you’ve already understood your options, you’ll appear much more convincing to those selling and lending to you. That means you’ll be much more likely to close a deal when you find the right place for you. – Get certainty from your mortgage lender. Having all your finances set out by an advisor before you approach a lender will better your chance of them offering you a firm mortgage offer.

3. Decide on your monthly mortgage payments Your current situation will determine how much you can afford to pay on your mortgage.

– If your already renting, you will be used to paying out every month. It’s likely that your mortgage payments will be cheaper than what you’re currently paying. As an added bonus though, your payments will help you call the property your own.

– If your living with family, the costs might come as a shock. Its important to make sure you’ll have funds to manage a new monthly expenditure before you go ahead with your purchase.  

4. View lots of properties There’s a lot to consider when it comes to choosing your property. Having an idea of what your after will make your search more efficient.

– Decide what kind of home you would like. Whether it’s having a garden, or driveway, then you need to decide what priorities must be met. Be clear on whats most important to you, so you can shortlist properties accordingly and not waste any time.

– Prepare to be flexible. Its normal to change your preferences once you start visiting properties. Keep an open mind and don’t be deterred if you fall for a place that isnt quite what you were expecting.

– Thinking about renovating. For some, redecorating a property is a chance to make to a home. But you not have the funds or time to do this. Keep in mind the work that will need doing when you view.

5. Make an offer You’ve set priorities, sought financial advice and found your ideal home. Now its time to make an offer.

– Don’t be afraid to haggle. It’s nearly always the case that the price agreed is different from the price advertised. Negotiate with your estate agent and vendor so that you get the best deal possible.

Getting onto the property ladder in 2019

Buying a first home can be as daunting as it is exciting for first-time buyers but there are a number of simple steps people can take to prepare themselves and make the process as smooth as possible. 2019 could be the best year to get onto the property ladder, with some industry experts predicting that Brexit could cause house prices to drop further. So if getting onto the property ladder is your number-one new year’s resolution, read on for our step-by-step guide to the home-buying process, plus links for further information.

Saving for a deposit and other costs

Finding that all-important deposit will be the forefront in first-time buyers’ mind, so setting a savings goal to focus your efforts in the crucial first step in the process. Hopefully as a first time buyer, you’re saving into a Help to Buy ISA or Lifetime ISA, so that you can claim a government bonus of up to 25% when you buy. If you haven’t already, and you want to buy in the next few months, its worth opening a Help to Buy ISA before they’re withdrawn from the market in November 2019. Otherwise, you could opt for a lifetime ISA, but you need to have saved for a year to benefit from the bonus. As well as saving for a deposit, you need to think about the additional costs involved with buying a home, including surveying charges, moving costs and solicitor fees. There is also stamp duty to consider in some cases. First time buyers are exempt from stamp duty on properties up to £300,000 but there are still charges if properties are priced above this threshold, something which is particularly relevant to buyers in London.

Investigate mortgages

A mortgage is a home loan which you pay off gradually each month over the course of a set number of years, known as a mortgage term. Most mortgage lenders will offer you a maximum of between 3 and 4.5 times the combined annual incomes of you and any other people you’re buying with. Speaking to a mortgage broker could help as this will ensure you have access to a broad range of deals. Checking your credit score is a must before considering taking out a mortgage as this will be the deciding factor in whether you are accepted for the loan and what rate you are offered. You should always make sure all the information is accurate and up to date. You can enhance your credit score by paying off an outstanding debts and being meticulous about meeting agreed payments such as utility or mobile phone bills. Also ensue you are making more than the minimum payment on credit cards in the six months prior to your mortgage application.

Choosing the right property

According to the Post Office, three fifths of properties sold in 2018 were in areas affordable for first-time buyers. Understanding the rate at which a property sells in the area you are looking to buy could also help you negotiate on price and also help to plan for additional costs, which has created a rate of sale map to help buyers. Being prepared to compromise is also a vital quality in a successful first-time buyers and, as adjusting your expectations and having a flexible approach is important.

Research the area and start the house hunting

If you don’t already live in the area you’re thinking of buying in, try and stay there for a couple of nights to see if its definetly somewhere you want to live. Test your commute and check out what the atmosphere and noise levels are like at different times of day and night. For many people, the hunt begins with setting up search alerts on a portals such as Rightmove. But while this is a sensible place to start, it shouldn’t be where your research stops. You’ll need to register with estate agents and start going on real-life viewings to really get a feel for the types of homes available for your budget. Contacting local property developers in the area is a great way to get a first look at available property on the market, in the coming months. Buying property from developers not only cuts fees with estate agents, but also allows you to have your home finished personalised to you.

To see what developments we have to offer in 2019, head over to our website.

The Power of Prop Tech 2019: What is it and why does it matter?

Property technology will continue to transform the industry

The UK’s property industry has remained stubbornly resistant to change, even as innovation reshapes entire verticals across the wider economy. Compared with finance or retail, where e-commerce now accounts for around 20% of total UK retail sales, technology-led disruption in the property sector has been marginal. Whilst most of us bank and shop very differently today to how we did just a few a years ago, the fundamentals around buying a house, acquiring a mortgage or renting office space has remained more or less the same. But all of those things are about to change.

Technology has been continuously remapping the way we work in the industry, and we can expect to see this trend continue in 2019. Over recent weeks, we have seen the Property technology innovations make national headlines, with the worlds first AI auctioneer overseeing an online property auction using blockchain to create an electronic audit trail and google making it’s first property tech move outside of the US by investing into UK property management service AskPorter. And its not just google who think that PropTech is a good idea.

Historically the property industry has been slow to embrace technological change. However, attitudes appear to be changing now we are heading into the year of 2019. A survey carried out by Property Week underlines the steady increase in the number of businesses looking to adopt new technology, with 68% of respondents saying they reembrace tech and are ‘willing to innovate and trail new products’. With 67% of property companies saying they believe the investments they have already made in tech have given their business a USP.

Innovative property technologies in the UK Market

1. Move bubble – a collaborative site for property owners, agents and renters

The site’s aim is to champion the renter’s needs and in doing so it’s a collaborative site where owners, agents and renters can work together as individuals to streamline the rental process. There’s a huge shift going on with the younger generation coming onto the market. They’re demanding more simplistic, value adding, mobile, cloud based solutions that enable collaboration between end-users, offering far greater levels of transparency.

2. Virtual View App – the UK’s first mass-market augmented reality property platform

Founded in 2016 out of the startup accelerator Rainmaking Loft, Virtual View App combines digital and printed marketing materials to allow users to access 3D property models and floor-plans, photo galleries and videos by scanning an image. There’s the ability to look at other elements of the property process, such as unique videos to market properties or cloud services that manage rental-related documentation.

3. Splitwise – an app to make shared living simple

In the ‘hassle-free’ space, Splittable claims to “make it easy to split bills and track expenses with your housemates”. This innovative application focuses on making shared living easier by tackling the often tricky subject of bills. Claiming to stop arguments before they start, Splittable makes it simple to split bills flexibly while helping users keep track of house share expenses.

So what does the future hold for property technology?

There is a lot of excitement around property technology both locally and globally. The key for success in property technology both locally and globally. The key for success in the property industry is to continually improve visibility and transparency, and to work hard to empower investors and other stakeholders as part of the value chain. That’s why its extremely important to get comfortable with new technology to make your business flourish, times are changing, and you know what they say, “innovate or die”.

Important things to know about Help to Buy ISAs in 2019

The Help to Buy ISA was launched on the 1st December 2015 and runs until the end of November 2019, with all bonuses having to be claimed by the 1st of December 2030. With just under a year left to open and start saving, now could be a good time to consider one. They offer an alternative to taking out a loan to help fund an initial deposit for your first home along with other benefits, with the way they work and how you can take advantage of them.

How do they work?

Help to Buy ISAs work in a similar way to regular ISAs, the only difference is, the government will top up any contributions made by 25% (up to a limit of £12,000). A minimum amount of £1,6000 is required to qualify for a government bonus and you can start with a deposit of anything up to £1,000. After the initial deposit has been made you can only save up to £200 a month, so you can’t simply transfer £12,000 across, for example. Then when it comes to buying your first home with the ISA, 25% will be added to it as long as its between the minimum and maximum contributions.

Qualifying Criteria

In order to open and use a Help to Buy ISA you simply need to be a first-time buyer over the age of 16. The good news is that they are available to each first-time buyer and not each home, so if you have a partner or want to buy a property for a friend, you can combine savings and get up to £6,000 from the government towards your home. Any home worth under £250,000 (or 450,000 in London) is eligible and it can be used with any mortgage, not just a Help to Buy one.

Limitations to Help to Buy ISAs

Within all the criteria mentioned, there are a few further restrictions. Help to Buy doesn’t work if you are wanting to buy a property overseas or open more than one. Technically you can’t buy a property and rent it out with one, but if your circumstances change and you have to work away, for example, you will be able to rent it out.

Should I open one in 2019

Any first time buyers will be looking into getting a good financial position before purchasing a property by ensuring they fulfil their financial obligations. If you are considering buying a house in the years should seriously consider open one. As long as you meet the qualifying criteria and open one before the 2019 deadline then theres little reason to not open a Help to Buy ISA.

Property to buy: Top saving tips for first-time buyers revealed

PROPERTY TO BUY: Saving for a first home can seem impossible, especially with rising house prices. However, new research has revealed the top saving tips for first-time buyers looking to purchase a new home.

Top tips and tricks for buying a new property

Property to buy is on the minds of many Britons, with many people looking to buy a home for the first time. It’s a long and often difficult journey, with saving for a deposit seeming like an almost impossible task. New research from the Post Office Money has now revealed the easy ways first-time buyers can successfully save for a first home. According to the research it takes first-time buyers four years of adjusting and scrimping to be able to save for their first home, with these tips helping along the way.

Top tips for people saving towards their first home

Cut back on the essentials

According to the Post Office, the easiest (and most common) way people manage to set more money aside when saving for their first home is finding ways to cut down on their day-to-day spending. This could be as simple as switching to supermarket basic brands, comparing energy and mobile providers to see if you they could reduce your their bill or even seeing if it’s possible to reduce their rent by moving to a less expensive property.

Map out a deposit goal and stick to it

This is important particularly if putting aside money with a partner – very few people save without assistance from their loved ones and first-time buyers will often be planning to purchase their home with a partner.

When saving money, be sure to agree on how much both partners can commit to save realistically on a monthly basis and hold each other accountable, so it’s more difficult to splurge.

Look for tools that may help, as there are a range of apps and calculators freely available to help plan a savings journey, such as the Post Office online tool.

Can savings be spread out over a longer period?

If the goal seems out of reach, consider how to reduce the pot needed to save, such as buying a smaller property, looking at a different location or considering no-deposit mortgages.

Have an honest conversation with loved ones about financial support

It’s common for first-time buyers to get some degree of financial support from their families as they attempt to get on the ladder. The research actually showed that more than half will do so as they attempt to pull the money together for their first home. When asking for money, be sure to have an open and honest conversation about the terms of the agreement. If they are providing a gift or a loan and if it’s a loan, be clear on what they expect in terms of regular repayments.

Keep an eye on how affordability shifts and incorporate that into any plan

According to the Post Office, four years is a long time in our uncertain housing market and buyers want to make sure they are aware of how things shift while saving. You also need to keep up to date on all of the government Help-to-buy schemes. Up until 2023 first time buyers participating in the scheme, you only need a 5% deposit, with the government lending 20 % of the costs and the rest is made up with a 75% mortgage. You wont be charged fees on the 20 p% loan for the first five years. See below for all Fortitudo’s developments associated with Help to Buy.

Developments associated with Help to Buy

• The Highlands, Fareham

• West Quay Road, Southampton

• Commercial Road, Poole

• Willow Park, Havant

• Statum, Bournemouth

• Canaway Court Poole

First time buyer mortgage rates fall to a record low

This is why now is the time to buy for first time buyers, the banks in the UK are
making it easier for first-time buyers to get on the property ladder by offering the
lowest mortgage rates since records began in 1995. Interest rates on two and five
year deals have fallen to a twenty three year low, according to the latest Bank of
England figures.

People looking to buy a property with a 5 % deposit and take out a loan for the
remaining 95% could get a two year mortgage with an interest rate of 3.3%, down
from 4.02 % a year ago. For five-year mortgage, the average rate was 3.89% at
the end of October. It was 4.71% in the same month the previous year. Both rates
beat the record lows for each type of mortgage reached a month earlier, at 3.39%
and 3.95% respectively, suggesting that lenders are increasing efforts to push
businesses up. The reason for these rates falling is mainly down to the stiff
competition among leaders in the industry.

Low-deposit mortgages are often popular among first-time buyers, but are usually
more expensive than other property loans, meaning lenders have more scope to
cut rates. Saving up a large deposit typically results in a cheaper mortgage. The
average two-year mortgage rates for a buyer with a 10 % deposit is 2.24%.
Even with cheaper 95% mortgages and exemptions on stamp duty, first time
buyers still need to raise more than £10,000 to put down a 5% deposit on a
typical property. The current lowest rate for a two year fixed mortgage with a 5%
deposit is 2.76%, from Halifax, however this is only available through brokers,
who charge a fee. It is common to see mortgage lenders offer low rates in the
final months of every year in an attempt to hit their end of year targets. However,
it is thought that the current low rates for first-time buyers will continue into
2019.

The economic benefit of development to the local community

Some people call us greedy and some call us ruthless, but really developers helps communities grow which fuels economic growth. A lot of people fail to recognise how far the economic benefit stretches with the creation of new developments. Many people just assume that it is merely a percentage of housing that is allocated to the council for social housing, under the section 106 affordable housing act, but really it’s so much more than that. For many property developers it is very frustrating, as they are penalised for being greedy and bringing too much change into a community, but people do not see the bigger picture and the economic growth we create.

The house building industry is a massive driver of the UK economy and makes a huge
contribution to communities across the country. While delivering much needed new homes of all tenures, house builders are quietly creating and sustaining jobs, boosting investment in infrastructure and amenities in village, towns, and cities. As well as becoming ever more reliant on private builders to deliver affordable housing through planning agreements, vast sums are ploughed into new roads, schools and community facilities each year. Below we talk about the economic footprint provided in the UK of the property development industry.

1. Before a site has even been acquired, a company has many employees working in
house, depending how large the company is. As you can see already there are jobs
created and business rates paid even before the development takes place, this could be
anything from graduate to apprenticeship jobs helping the community grow.

2. Acquiring a development site is a key stage and the beginning of the property
development process, there are many systems in place to help to source a site, which is
normally done in house. Once this is found, each party has to have a legal
representative which they will outsource to a local law firm.

3. Development appraisal forms the backbone of the financial side of property
development and is arguable the most important step within the property development
process. A developer will know their appraisals inside and out and be able to quickly and efficiently put together an initial site appraisal and cash flow. This will be done in house, and is the deciding factor as to whether the site is worth purchasing, where many different considerations will be taken into account. This is the start of outsourcing the project to different expertise in the field. This could be a planning consultant, architect, solicitor, engineer. This changes from site to site, but there is always lots of jobs to go around in the local community.

4. A development cannot happen or go ahead without funding. Money is one of the 3
pillars of property development and is an area new and inexperienced developers struggle with the most. For each site that you look at, you need to understand how you
will fund it and how to structure the financial side. Each site is different and will require
a different set of funding criteria, and because it’s become increasingly difficult for
developers to get funding, they have to sometimes work with different funding
partners, this can lead to inefficiency and become very expensive.

5. One of the 3 pillars of property development is planning, and the required permissions to actually be able to start and finish a development project. As a property developer, we need to manage the process to ensure all the permissions are in place and that we have a scheme designed that is viable. A developer will know how to optimise and maximise every single square foot on a site to achieve the maximum amount of profit the sit can yield, which in fact means more affordable housing due to being a percentage measurement. There are many other permissions required, not just
planning. For example, building control and party walls. These all need to be managed
along the process to ensure that a development can actually go ahead and happen.

6. Reaching the construction step along the property development process is a major
milestone and there will have been some serious work, effort tune and money invested
into the project. There are many ways to contract with a builder, and this will also
depend on the role you are taking during the construction process.

7. Once the development is finished, it will then be sent off to different estate agents
around the area, but also the development company itself may choose to market the
properties. Sometimes they may hire private marketing companies around the area to
give it that extra push, or work with local newspapers and PR companies.

As you can see from the above, no matter what angle the development is going there is always a need for outsourcing jobs in certain expertise. What people do not understand is the idea of job creation for so many local businesses from development companies. It being a major boost for the local economy, providing modern and attractive spaces for businesses, creating new jobs and encouraging more visitor numbers into the town throughout the year. Below you can see some statistics put together from Litchfield’s of the economic footprint of developers around the UK.

• A total of £38 billion for the economy is generated by house building each year.

• A total of £4.2 billion is either given from developers to help provide affordable housing
in the local area.

• There are over 698,000 jobs created each year from a variety of fields of expertise.

• There is an around £2.7 billion in tax paid each year, which comes from a Council tax, Stamp Duty tax, Corporation tax, National Insurance, Pay As You Earn tax.

• A total of £5.9 billion spent in local shops and services by residents of new homes.

• A total of £1.2 billion is spent on tenants making their houses feel like home
i.e. furniture

 

 

Learn why the property development industry is an important aspect to the affordable housing crisis

Affordable housing is fundamental to health and well-being of people and to the smooth functioning of economies. Over time it has become increasingly difficult for developers to gain planning permission for different sites around the UK due to a slowing in process from council job cuts and development feasibility becoming more challenging. In addition to this traditional lenders are increasingly reluctant to approve loans to developers, and this is having the biggest impact on small to medium (SME) property development companies.

It needs to be highlighted that developments always deliver affordable housing, where viable due to a clause in the section 106 affordable housing act. It is a planning legislation which requires developers to include a portion of affordable housing in their developments, which is then often sold to housing associations. It is the primary driver of affordable housing delivery, with 45% of housing association homes (14,437) developed using the mechanism in 2016/17, according to figures complied by the nation housing federation.

The importance’s of small developers in helping address the imbalance between housing demand and supply cannot be understated, and off course the push for affordable housing which is given to the government. Policy and initiatives designed to encourage SME developments to achieve their maximum output new build homes are needed. Doing so ensures the UK effectively uses its available resources, increasingly the housing stock and making the property market accessible for prospective home buyers.

What can the government do to narrow the housing-affordability gap?

Unlock the land supply is an important aspect to narrowing the affordable housing gap. Land is one of the largest property development expense and securing it at an appropriate location can be difficult. In the largest global cities, many parts of land remain unoccupied or underused. Some of them may belong to government and could be released for development or sold to buy land for affordable housing. Reducing construction costs would encourage developers to challenge bigger project, which is turn would lead to more affordable housing, so the obvious solution is to allow taller buildings.

Lowering financial costs for buyers and developers, will lead to improvements in underwriting would help make banks safely make more housing loans to lower income borrowers. Governments could help cut the financial costs of developers by making affordable housing projects less risky by guaranteeing buyers or tenants for finished units.

Current market revealed: First time buyers are driving the housing markets

Just in August alone there were 35,000 first-time buyer mortgage applications completed, which is one of the best months this year, and 2% higher than the previous year. Experts said people that are taking their first step on the property ladder are benefiting from continued low interest rates, a good choice of mortgages and government policies aimed at giving the sector a helping hand. Furthering this stamp duty was cut for first-time buyers in 2017, leaving buyers with more money for better homes.

Buy-to-let mortgages have helped to transform the concept of housing in the UK over the last few decades. They represent one method by which rental housing can be transformed into an investable asset. Data from Savills 2018 shows the average rate for five-year buy-to-let mortgage could be an appealing prospect for many landlords, especially at such attractive rates and range of mortgage products available and will continue to grow, more than doubling over the past year. Property website Rightmove said that first-time buyers are in the best time to negotiate deals this autumn. Rightmove has also seen a softening in asking prices for properties with two bedrooms or fewer – the usual target market for both affordability-stretched first-time buyers and buy-to-let investors.

Overall the house purchase completions remain stable, driven largely by the number of first-time buyers which reached its highest monthly level since June 2017. First -time buyers generally are benefiting from low interest rates and more choice in the mortgage market, as well as schemes such as Help to Buy. Lenders continue to offer competitively-priced high loan-to-value products to attract first-time buyers and with property prices softening in some areas, there are good opportunities for those trying to get on the ladder for the first time.

It has never been a better time to buy, grab your opportunity now. At Fortitudo we strive in making it possible for first time buyers to get themselves onto the property ladder. Many of our developments are associated with Help to Buy, to kick start your journey to owning your own home. For more information on our latest developments, please visit out website.

5 things you need to know about the Help to Buy equity loan

  1. First time buyers

The scheme begun helping first time buyers back in April 2013, and since there has been over 169,102 competitions to March 2018, of which 81 per cent of these were first time buyers  and around 13,000 of these were based at London properties. The value of these properties is estimated at £42.23 billion, according to the Ministry of Housing, communities and Local authority.

  1. Equity Loan

The Help to Buy equity loan scheme supports those with a low deposit looking to get onto the property ladder. This is completed by combining a 5% deposit from the buyer, a government loan of up to 20% of the property value, which is interest free for the first five years, and a 75% mortgage. There is also a scheme for those looking to buy in London.

  1. Re-mortgaging

It is possible to re-mortgage with an equity loan in place, but it depends on the circumstance of the homeowner. There are a number of moving variables that will affect how easy it is to re-mortgage. This includes the mortgage loan itself, how much the property value has risen or fallen, whether the homeowner has any equity to put in and how much income they receive.

  1. Selling up

This follows the same process as any other property sale, however, at the point of sale, the homeowner will have to repay the equity loan in full to the Home and Communities Agency. The amount of paid back will be the same as the amount burrowed, unless you sold after the 5 year mark, then interest would start to occur onto off your equity loan.

  1. Alternatives

The Help to Buy equity loan is not for everyone, and there are many different ways for first time buyers to get on the housing ladder, such as the shared ownership scheme. This allows people to buy a share of between 25% and 75% of a property. A mortgage will be paid on the share the homeowner owes, with a subsisted rent on the remainder being paid to the relevant housing association.  Whilst shared ownership makes mortgages more accessible for those on a lower wage, homeowners still have to pay 100 per cent of the ground rent and service change on a property. Homeowners do have the option to buy a greater share of the property in the future, this is a process called stair-casing. However a stamp duty charge will be charged on the whole value of the property and will have to be paid once the shares equal or exceeds 80%.