Despite the ongoing Brexit uncertainty causing a fall in house prices, first-time buyers are still experiencing great difficulty in getting themselves onto the property ladder. However, now that an extension to Article 50 has been agreed, this lull in the property market looks set to continue for the foreseeable future, serving up an incredibly tempting window of opportunity.
According to the Nationwide House Price Index, house price growth is now at a six-year low, with property for sale now becoming much more affordable to young buyers. Although saving for a deposit may still seem like an insurmountable task, this is undoubtedly a fantastic time to buy your very first home—as long as you plan on living there for a significant amount of time.
Even so, the process of purchasing a property can soon become incredibly convoluted and overwhelming to those who have never done so before. Before you take the plunge and climb the first steps on the ladder, you need to read our top tips on buying a home in the UK this year:
Don’t Rely on Brexit
Jobs. Food. Healthcare. It appears Brexit is having an influence on just about everything these days, although the potential effects on the property market remain completely shrouded in uncertainty. Of course, it’s ultimately this uncertainty which is causing a drop in the demand, supply and prices of UK homes.
At the start of the year, RICS reported a significant drop in the number of people selling and buying property, with the majority waiting until the impact of Brexit has become much clearer. Homeowners are hoping for prices to rise before selling up, while buyers are anticipating a hard Brexit which, according to Bank of England governor Mark Carney, could see prices fall by up to 33%.
However, house price growth remained steady immediately after the EU Referendum, and there’s no way of knowing which way the pendulum will swing once we’ve finally passed the Brexit deadline. Instead of putting your life on hold and waiting for Theresa May to sort out a deal, if you’ve fallen in love with your dream property, then you need to take the plunge and go for it.
Set a Strict Budget
Regardless of any Brexit consequences, buyers always need to set themselves a strict budget before embarking on their property search. By outlining exactly what you’re looking for and how much you’re willing to spend, you can avoid wasting time looking at properties you just can’t afford. Not only will this complicate and elongate your search for a home, it will also leave you feeling disappointed in the property you end up with.
Consider Help to Buy
For many first-time buyers, the biggest stumbling block is saving up enough for a mortgage deposit, especially when most of their income goes towards renting their current home. Fortunately, the Help to Buy scheme is designed to help in this regard, with the government adding an extra 25% to contributions made to a Help to Buy ISA.
Although you can only save £200 at a time and won’t actually be eligible for bonuses until you’ve saved £1600, first-time buyers can receive bonuses of up to £3000 and make an initial deposit of £1200. Perhaps more impressively, these bonuses are capped at £3000 per buyer, not per household, so those buying a property with a partner could receive government bonuses of up to £6000.
Of course, this essentially helps first-time buyers save much quicker for their deposit, while the government will even lend you up to 20% of the property price through the Help to Buy Equity Loan scheme. Leaving you to pay a deposit of just 5%, this particular initiative is a fantastic option for first-time buyers hoping to purchase a new-build worth under £600,000.
If a hard Brexit does result in a market crash, it’s very unlikely many property owners would be willing to sell in such a climate. By investing now, you can take advantage of the lower prices and then look to sell on once the market has recovered post-Brexit. When you consider the benefits of the Help to Buy scheme, there’s no doubting the fact this is a very exciting time for first-time buyers in the UK.