Property Purchase & Prices During Lockdown

Six things first-time buyers should consider when looking to purchase a home during the second lockdown

Ross Counsell, chartered surveyor and director at regulated property buyers, Good Move, offers his thoughts to first-time buyers thinking about purchasing a property during the second lockdown:

Look at the government grants available to you:

There are many grants available for first-time buyers. The first option is ‘Help to Buy’ which has been extended until 2023, however you can only buy a new-build home. This is a good option for people with a small deposit as you can borrow 20% of the purchase price interest-free for the first five years if you have at least a 5% deposit.

Another option is shared ownership which is ideal if you need a bigger property, as you don’t have to pay the full price. However, there are some things to consider such as your combined income needs to less than £80,000. If eligible, you can buy between 25% - 75% share of the property and pay a reduced rent equal to the share of the property. By paying reduced rent, if you wish you can also save up to purchase more shares in the property, eventually purchasing 100% of the property.

A third option is the stamp duty holiday. However, this only benefits first-time buyers purchasing a home in a more expensive area.

Speak with a financial adviser:

It has never been more important to protect your finances. Therefore, if you’re looking to purchase a home during this time, I suggest you speak with a financial advisor. Using a financial advisor and their expertise will ensure you get the best possible mortgage for your circumstances at the best possible rate. They’ll also help you to navigate the market with it being your first time and explore different options.

Make a checklist before you view a property:

Your first house viewings can be exciting and likely, you’ve already been won over by pictures of the property you’ve seen online or at an estate agent. But it’s important to never take a home you’re interested in buying on face value, and try not to get carried away by excitement – you should be thorough with your house viewings to make sure this is the right home for you. Check for factors including if the doors and windows are secure and efficient, if the current owners have experienced disputes with neighbours if there are any damp or holes in/on walls, are the electrics/plumbing up to standard, and are there any structural issues. Having a checklist before your viewing will ensure you cover all the important factors.

Shop around:

Try not to instantly purchase the first home you view. Shop around and view different properties with your checklist. I’d also recommend being a little cautious when viewing a property at a very low price. Although it may seem like you’re getting a bargain, not every home selling for cheaper will be a good deal. Generally, the lowest-priced homes will require many repairs that will cost buyers in the long run, so be wary of this when looking to buy a cheaper home as you may end up spending thousands on big repairs late. I advise thoroughly checking out the property before you commit to it and ask important questions to determine how much work the property needs. Don’t get swept away in a low house price or jump at the first-rate a mortgage lender offers. This is a big decision and one that needs to be thought about carefully. 

Save, and then save more

Sounds cliché, but the more money you have saved, the better. You need to establish how much money you can put towards the cost of a new home. Usually, the bigger your deposit, the better the mortgage rate you’ll be offered. Plus, your monthly repayments will be lower. I advise saving a minimum of 10-15% of the cost of the property to obtain a mortgage. But a deposit of 25% will allow you to get a better deal.

Use a chartered surveyor

When you’re looking to buy a home, it’ll be the biggest investment decision of your life, and using a chartered surveyor will ensure you’re getting a professional opinion on the conditions and value of the property you’re looking to buy before you sign on the dotted line. Surveyors who are members of the Royal Institution of Chartered Surveyors will ensure you have all the facts you need about your property. They’ll solely work for you and uncover any issues that will cost you more money to fix in the future.

Ross Counsell, chartered surveyor and director at Good Move, on the Halifax House Price Index:

“According to the latest Halifax House Price Index figures, average house prices in the UK have reached a record high, at £250,457. This marks a 7.5% increase from this time last year - the strongest growth from June 2016. 

"However, further figures show that there appears to be a slowdown in the property market. Month-on-month house price growth has decreased considerably, now at just 0.3% compared to 1.5% in September. We also know the stamp duty holiday has helped keep the property market afloat this year, but when this ends in March we expect the market to slow down even further, with a greater increase in house prices and less people looking to buy and sell their homes. 

"In this case, first time buyers will be impacted the most. They are likely to need a bigger deposit than ever before, as lenders will be more cautious when granting a mortgage. With the competition of existing homeowners looking to move on their hands too, it will be difficult for first time buyers to get on the property market next year if it does slow down as expected.   

"And as we enter a second national lockdown, the future of the economy also remains uncertain. We believe the true impact of coronavirus on the property market will become apparent as this year draws to a close."

For more information, please go to: https://goodmove.co.uk/

Source : Good Move

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