First time buyers are key players in the property market, and governments past and present have aimed policies at them with incentives such as the permanent stamp duty holiday and the help to buy scheme. As 2021 draws to a close and we look forward to 2022, we look at the challenges faced by first time buyers and what the future may hold.
Challenges for first-time buyers
The ongoing challenge for those trying to take their first step on the property ladder has always been saving enough for a deposit. With house prices increasing so rapidly, it is becoming impossible to secure the 10% deposit most lenders require. A second challenge is the availability of affordable homes in the area. The smaller one-bedroom or two-bedroom homes tend to get snapped up quickly, either by other first time buyers who have been waiting to secure a property for some time, or by investors who have funds readily available.
Meeting the challenges
Aware of the barriers faced by first-time buyers, the government has introduced a range on initiatives to help. As many of these schemes are only available for newly built homes, the Home Owners Alliance have put together some tips for buying a new home.
The permanent stamp duty holiday, which has been in place since 2017, means that first-time buyers do not pay stamp duty on a property they buy as a main residence, as long as it is purchased for less than £300,000. This can save first-time buyers thousands. Mortgage lenders have also been encouraged to provide a range of low deposit products with the government’s 95% mortgage guarantee scheme that was launched in April 2021. Under this scheme, the government removes some of the risks for lenders offering higher loan to value mortgages, such as stepping in to cover repayments if the borrower defaults, for example.
First-time buyers are now more likely to be able to secure the mortgage they need with the deposit funds they have available, not forgetting the need to cover those additional fees such as conveyancing. Experienced conveyancing solicitors Rugby and other areas such as Sam Conveyancing conveyancing solicitors Rugby can help navigate the intricacies of any government schemes being used.
While the outlook is much brighter than in the thick of the pandemic, buyers can still expect to face challenges along the way to securing their first home.