Our Property Conveyancing Solicitors Discuss How The Property Market Could Change For First Time Buyers
Posted on 14th August 2020
At the moment, there is much speculation over the property market and how it will cope with the changes forced upon it by the COVID-19 pandemic. On one hand, the Government have attempted to give the market a boost, offering an increase in Stamp Duty thresholds, potentially saving buyers thousands and thousands of pounds. However, on the other hand, according to the BBC, official forecasts predict that there will be a fall in UK house prices as more jobs are affected and people cannot afford to buy property as readily.
You may think that this would be a helpful occurrence: if the property values decrease, people may be able to afford to buy more easily. Our Property Conveyancing Solicitors explain that this may not be the case. Sadly, the issues arising could mean that property purchases become “out of reach” for one particular group of buyers over any other; first time buyers.
Will house prices change?
Due to the Government’s Stamp Duty intervention, the property market has seen an initial increase in property prices and demand for property. Some experts believe that this will not last, and house prices will begin to fall. The Office for Budget Responsibility, the official Government forecaster, has predicted that the market could decrease between 2% and 22% over the next 18 months.
Is this good or bad news for any first-time buyers?
You may presume that this fall would be good news for first time buyers. For those with stable jobs, which have not been impacted in recent months, and who may have managed to use the lockdown to accrue more savings, this may be fantastic. Perhaps they can get a little bit more for their money, or their dream home for a bit cheaper than they expected. For others, according to the Resolution Foundation’s Housing Outlook, they could face the following obstacles:
1. Lenders may ask for larger deposits.
2. Saving has, for many, become more difficult.
3. Many first time buyers will not have paid Stamp Duty in the first place, due to normal Stamp Duty rules. Therefore, the new Stamp Duty rules do not, in all likelihood, have any effect on most new buyers, and this incentive has been lost.
How could First Time Buyers be helped?
Well, our Property Conveyancing Solicitors note that the Resolution Foundation has called for Government support for first-time buyers to help support their incomes. Alternatively, they have called for a scheme to benefit First Time Buyers, like Stamp Duty previously had.
What issues have First Time Buyers faced since the market picked up?
Well, one recent case that our Property Conveyancing Solicitors have come across highlights the potential issues that buyers may be facing in the future.
A 27-year-old lady, Cordelia, was purchasing a property, with the assistance of her parents. Her mortgage provider was aware of her parent’s gift. When the Estate Agents came back to Cordelia and explained that the buyer wanted slightly more money, her parents agreed to contribute the difference. However, Nationwide would not allow it. Having changed their criteria, in order to get a mortgage with a 10% deposit, the buyers must now be able to prove that they saved at least 75% of the deposit themselves.
Whilst no lenders have, as of yet, followed Nationwide’s trend, this change was only introduced recently and, according to the BBC, there is a concern that others may follow suit. You can read more about this recent case and the issues faced on bbc.co.uk, here.
All is not lost though - find out about First Time Buyer Stamp Duty (the fact that first time buyers do not have to pay!), here.
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