What does 2010 hold for the first-time buyer?

We have all heard the encouraging news in relation to the housing market improving, but what is the reality? First-time buyers have had a notoriously hard ride obtaining mortgages, with many lenders requiring a sizeable deposit that is not always possible for those desperately trying to get on the housing ladder. We have clearly seen falling housing prices and mortgage rates going down in 2009, but how will this impact the first-time buyer in 2010?

Many first-time buyers have felt the pinch, with the end of the stamp duty holiday for properties up to £175,000.00 taking place from the 1st January 2010. Now all properties over £125,000.00 attract stamp duty liability. This is an additional cost people are having to budget for from the outset, particularly for many of my first-time buyers who are purchasing new build properties off-plan and due to complete in 2010. Many buyers in the marketplace have wrongly assumed that an exchange of contracts prior to the change meant they avoided this cost – you should be aware that the stamp duty liability comes about on the completion date. First-time buyers are trying to save hard for their deposit, valuation fees, and legal costs, and the stamp duty for the lower end of the market does add to that struggle.

With first-time buyers trying to take that first step onto the property ladder, and some not having the large deposit required, I am seeing more shared-ownership and shared equity schemes through first-time buyer, government-led initiatives. Interestingly, I am even working with first-time buyers purchasing on one Milton Keynes new home development, where the developers are offering their own competitively rated mortgages. This is encouraging news for the first-time buyer, enabling the market to continue to grow and hopefully making moving home for everyone affordable again.

Recent market trends have meant I also see more of my first-time buyers using ‘the bank of Mum and Dad’, receiving financial assistance from their parents in order to take their first step; or, this could just be the parents wanting their children to finally fly the nest! It has been reported in the press that the average age of the first-time buyer has risen from 29 to 30 in 2008, and many confirmed that this move was made with the assistance of their parents. So our next generation property owners are starting to buy later and live at home for longer; after all, it’s cheaper to live at home than it is to buy and rent!

If you need any advice on the first-time buyer initiatives, please contact me at sarah.wilkins@mablaw.co.uk