Everything you need to know about the first time buyers ‘market

First time buyers make up the biggest part of the property market in the UK for first time in 23 years, new research has found. Overall, the number of first time buyers reached 372,000 in 2018, accounting for the majority of home purchases for the first time since 1995, according to the latest Halifax first time buyer review. This is a rise of 2% in the last 12 months, continuing an upward trend over the last seven years. Although growth in 2018 was at a slower rate than 2017 when it was 7.6% and 2016 when it was 9%, first time buyers overall have increased by 92% from an all-time low of 192,300 in 2008.

First time buyers now account for just over 50% of all house purchases with a mortgage, an increase from 38% a decade ago, the research also shows. The average price paid for a typical first home has gone up by 39%, from £153,030 in 2008, to £212,473 in 2018, and the average deposit has increased by 57% from £21,133 to £33,252 over the same period.

Meanwhile, the average deposit put down by a first time buyer was 14% of the purchase price in 2008 at £21,366, jumping to 20% in 2009, the highest over the last decade. In 2018 the average deposit has come down to 15% of the purchase price, although the average property price has continued to increase. First time buyers are putting down an average deposit of £32,841, with those  in London putting down a higher £110,656, while those in Wales are paying the lowest average deposit of £16,449.

Terraced houses, closely followed by semi-detached properties have continued to be the first-time buyer’s home of choice over the past decade, making up 67% of mortgages for first homes in 2018. The average age of a first-time buyer in 2018 has remained at 31, two years older than a decade ago. In London it has grown from 31 to 33 since 2008, the oldest in the UK. The biggest increase in age was in Northern Ireland, up by three years from 28 to 31. New buyers coming on to the ladder are vital for the overall wellbeing of the UK housing market, and the continued growth in first time buyers shows healthy movement in this important area, despite a shortage of homes and the ongoing challenge of raising a deposit.

Last year was the first year that first time buyers accounted for the majority of the market since 1995, which shows that the factors reducing some of the associated costs, such as continued low mortgage rates and stamp duty, are supporting the increasing number of people taking their first step on to the property ladder. On a regional basis, while the numbers of first time buyers have increased nationally, the number of first time buyers in Scotland and Wales has fallen over the last year. London and the South East have seen the fastest rise in average price paid and deposit put down by first time buyers over the last five years. However, the average price paid in London grew only by 1.4% and the deposit fell by 1.4% over the last 12 months. This is in contrast to the 50% growth in first time buyer prices in London in the five years to 2018, compared to growth of 36% nationally.

At Fortitudo we strive in making housing assessable for everyone and create property ownership possible for first-time buyers, the majority of our developments are associated with governments schemes like Help-to-Buy. We believe in giving everyone a chance of owning their dream home.

First time buyers – how much of a deposit do you actually need to get onto the property ladder?

The average first-time buyer deposit was almost £4000 lower in the last financial year, according to a new government housing survey. The question is… could you have saved enough deposit to buy a property without even realising it?

The annual England housing survey revealed the typical deposit paid by first-time buyer in 2017/18 was £44,632, down from £48,591 the year before. This means its fallen by £3,956 or 8.14%. Fortitudo have taken a closer look at how first-time buyers have achieve their home ownership dreams and offers advice of how you can too get yourselves onto the property ladder.

Are things getting better for first-time buyers?

It is becoming increasingly more accessible to first time buyers to get onto the property ladder in the UK. There and now many different government schemes helping thousands to follow their dream of owning their own home. These schemes include Help to Buy equity loan, Shared Ownership and Help to Buy ISA. Furthering this, mortgage rates are falling and mortgage lender is becoming higher, with Banks including Lloyds lending 100% of the property purchase price.

How do first-time buyers buy their home?

More than half (56%) of first-time buyers bought their home jointly with a partner or spouse while 43% bought alone, according to a recent survey. Almost all first-time buyers in England (99%) had a repayment mortgage. Nearly half 46% had a mortgage of 30 years or more, 50% had a deal lasting 20-29 years, while a small proportion 3% had a 1-19 year mortgage. Borrowing for longer can help improve your mortgage chances. By spreading repayments beyond traditional 25 year period you can lower your monthly repayments which can help you meet strict affordability requirements.

First-time buyer have never had it so good

Brexit uncertainty Is making it easier for first-time buyers to get a good deal on a home. House prices have stagnated in some parts of the country, especially in London. The fewer number of buyers around has forced some sellers to accept offers below asking price. As well as taking advantage of the current ‘buyers’ market, first-time buyers can also benefit from historically low interest rates on their mortgage. This has led to monthly mortgage repayments being lower than rent in most of the UK.

Are you ready to buy your first home?

If you’ve started saving for a home and are itching to take that first step onto the property ladder make sure you check out our developments and secure your new home today with a reservation fee for as little £500 for Help to Buy users and £1000 for non-Help to Buy. To see what we have becoming available in 2019 head over to our website.

5 top tips for buying a property in 2019

If you’ve set your sights on buying the house of your dreams in 2019, you’ll be pleased to hear that current buyers’ market conditions look set to continue for at least another six months. That doesn’t mean you should just sit back and wait for the perfect opportunity to come to you though.

1. Plan for a deposit, even if you don’t have to

According to Rawson Finance, lenders are granting 100% loans in certain circumstances, but smart buyers are putting down deposits anyway. Putting down a deposit is traditionally around 10% of the purchase price, this helps to minimise the risk your bank is taking by granting you a loan. This can have a significant effect not only on their likelihood of granting you finance, but also on the interest rate they’re willing to offer you. Buyers with deposits have been known to qualify for interest rates as much as 2.5% lower than those asking for 100% bonds. That can literally save you hundreds of pounds over the course of a 20 year loan, and turn your investment into a real winner. Once your savings pot is up and running, consider using an online affordability calculator to get an idea of how much you’ll be able to borrow based on your income and outgoings. Although this should be used as a guide, the information will help you focus on properties that are within your range.

2. Don’t forget about the prequalification’s

Before getting a mortgage, you will be credit checked, so now is the time to check your own credit report and ensure all information it contains is accurate and up-to-date. A good credit score can be the deciding factor in not only getting approved for the mortgage, but also the rate you are offered. Plan now to start paying down any outstanding debts, be sure not to miss any agreed payments on utility bills or mobile phone bills, and try to make more than the minimum repayment in the six months before you mortgage application. Competition for specific properties can be fierce at any time, particularly within the popular neighbourhoods and price bands. A good property, for a fair price, will often attract numerous competing offers, regardless of what the broader market is doing. The last thing you want is to find that perfect home and then lose out to another buyer simply because they took the time to get prequalified, and you didn’t.

3. Research affordability hot spots

You may have your heart set on a popular area, but so will many other buyers. On average, new buyers will end up moving 5.2 miles away from where they originally intended. Consider widening the net to make your budget go further, so you can but more space for your money. You could try searching in up and coming areas, which may become future property hotspots, rather than places where property prices have already increased a lot.

4. Play the stamp duty game

Those taking their first steps onto the property ladder have saved £2,300 on average, while those buying in London have seen almost double the discount with a typical saving £4,300. If first time buyers in England keep the costs of property below £300,000, there is no Stamp duty payable. And those buying a starter pad worth between £300,000 and £500,000 get a reduced bill, paying 5% on the remainder above the tax-free amount.

5. Help to Buy

Another popular method for first time buyers getting on the property ladder, is the Governments Help to Buy loan scheme, which will run until 2023. It’s available to homeowners looking to move as well as first time buyers, but only for new build homes. It gives an equity loan that can be used towards buying a property and means new buyers in England may need only 5% per cent deposit to get a good mortgage. With Help to Buy, even if you only have 5% per cent saved, you can get a well-priced mortgage because the Government is effectively guaranteeing the rest of the deposit. There are some limits on the price of the property you can buy and the loan must be used to buy your own home only, not by-to-let. Furthering this you have to get a repayment mortgage not an interest only mortgage.

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.

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

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%.

Autumn Budget 2018: New Help to Buy scheme to be launched for first time buyers

On Monday it was announced from the government that a new Help to Buy equity loan scheme for first-time buyers will be launched in April 2021. The scheme will feature regional price caps, and come alongside reforms to stamp duty for shared ownership users, capital gains tax changes for landlords and extra funding for house builders. It has enabled developers the visibility needed to plan their land purchase requirements, and while the government has stated that there will be no extension after 2023, these schemes have already been extended twice.

New Help to Buy scheme for first-time buyers

The current help to buy equity loan scheme is due to end in March 2021, a new version will be launched with regional price caps. The scheme, which will run for two years until March 2023, will only be available to first-time buyers.

The new scheme will have a higher price cap, which will be 1.5 times the current average first-time buyer price in each region. With South West capping at £349,000 and London at the maximum of £600,000. The government says it has no plans to continue offering Help to Buy equity loans after March 2023.

£500m for housing infrastructure fund

Given that the major house builders cannot make up the shortfall in housing the British Business Bank will provide guarantees on up to £1bn of loans to small and medium sized builders, with an additional £653m going towards strategic partnerships with nine housing associations. The budget announcements also included a further £500m for the housing infrastructure fund, to unlock up to 650,000 new homes. The government has also agreed to reduce planning restrictions in order to make it easier to convert shops into homes.

First-time buyer stamp duty cut extended to shared ownership

The government will also extend stamp duty relief to first-time buyers purchasing shared ownership homes priced up to £500,000 backdated to include those who have bought since 22nd November 2017.

Currently, buyers who use a shared ownership scheme can either pay duty on their share of the property (if it costs more than £125,000 threshold) or on the whole value of the property (including the portion they haven’t bought yet but may buy further down the line.

Under the current system, those who chose the former would previously have missed out on the first-time buyer stamp duty relief. So, assuming you’re buying 50% of a home priced at £350,000 and only plan to pay stamp duty on your initial share.

– You share costs 175,000, meaning you’d need to pay stamp duty on the amount over £125,000 threshold, that’s £50,000.

– On this £50,000, you’ll have needed to pay stamp duty at 2% that’s £1,000.

Under the new system, the buyer wouldn’t need to pay this £1,000 charge. The cut to stamp duty for first-time buyers was originally announced in last years budget, and the chancellor says it has so far helped 121,500 buyers.

Non-resident stamp duty collection

The government will publish a consultation in January 2019 on introducing a 1% stamp duty surcharge for non-resident buying a home in England and Northern Island. Whilst stamp duty relief has also been extended, backdated to November 2017, on first-time buyers purchasing shared ownership homes, with an upper limit of £500,000.

Capital gains tax changes for landlords

The Chancellor says that the government will improve private residence relief on capital gain tax. From April 2020, letting relief will be reformed so that it will only apply when the owner of the property I in shared occupancy with the tenant. The landlord capital gains tax exemption on the final 18 months before a property is sold will also be cut to nine months. These changes will be subject to a consolation