| Today's Property Market For First Time Buyers |
| Articles - Mortgage |
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The 24th March saw our Chancellor Alistair Darling announce a stamp duty freeze on homes under the 250,000 threshold for first time buyers, in a likely attempt to sweeten voters as the General Election looms.
The 24th March saw our Chancellor Alistair Darling announce a stamp duty freeze on homes under the 250,000 threshold for first time buyers, in a likely attempt to sweeten voters as the General Election looms. Some quarters saw this as a politically calculated move designed to sweeten voters in the run up to the General Election this May, yet the news was welcomed by the main - especially first time buyers themselves who face many obstacles in trying to get onto the first rung of the property ladder. Aside from the fees associated by buying a property, other barriers young people face include saving up enough money for a deposit. Given the turbulence of the property and mortgage markets over the past two years, lenders are now more restrictive with whom they lend to. The borrower must usually save at least 10 per cent of the mortgage value they wish to borrow, although in reality this figure is often far higher. As the Communications Manager at the Council of Mortgage Lenders, Bernard Clarke, explains: "On average, now, [the deposit is] 25 per cent of the cost of the property, which is a very significant amount of money for a first-time buyer to acquire". Many must therefore rely on the so-called 'Bank of Mum and Dad' or team up with friends or partners so that they can afford to put a deposit down. According to the British Property Federation it would take the average 25 year old 18 years to save up 33,000 - the typical amount needed. This clearly poses a difficult problem for people keen to own their own home and to counteract this the Government has initiated the HomeBuy Direct scheme. In the scheme, people who are unable to afford a home themselves are able to purchase a new build property, assigned by the developer, through an equity loan of up to 30 per cent of the purchase price. This is jointly funded by the developer and the Government. The remaining 70% must be financed by the purchaser. Housing developers are coming up with incentives too, to help make their property more affordable to first time buyers. Barratt Homes for example, the nation's biggest homebuilder by volume, currently offers schemes like Shared Equity, Head Start and Parent Power to enable first time buyers and key workers to get onto the property ladder. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Philip Youngwood writes on a number of topics relating to property including first time buyers and stamp duty. |