by Mark Johnston
What do first time buyers need to get on the property ladder?
It seems that the government’s decision to remove the stamp duty holiday for first time buyers in March this year along with the mortgage war which only wants those with a 40% deposit has left this already fragile sector with little support.
Mark Hayward, president of the National Association of Estate Agents (NAEA), stated that “since the economic downturn took hold in 2007, we have consistently called for increased support for first time buyers to aid the wider recovery of the housing market”.
Other experts believe that assisting those looking at property on the start of the ladder could help to generate an upward momentum in the whole of the market. They also add that what is really needed is much more commitment from the government and major lenders to help lift the barrier first time buyer currently face.
On a brighter note, Lloyds banking group has recently confirmed it is making £5 billion available to first time buyers throughout 2012, a move it says will potentially help more than 50,000 people buy their first property.
However, first time buyers now need more help than ever before to get on to the housing ladder. A recent survey carried out by rightmove.co.uk, a property website, claimed that first time buyers now need three key ingredients in order for them to purchase a property. These ingredients were a degree, a partner to share the cost and benevolent relatives who are prepared to help!
This particular survey used respondents of all ages and found that of more than 5,000 people hoping to buy their first home in 2012 38% were educated to degree level and 30% had post graduate qualifications.
David Hollingworth, of mortgage brokers London and Country, said that “the rising number of first time buyers with degrees is a sign of the higher salaries now need in order to take out a mortgage”.
While a bachelors degree is now commonplace, the bachelor pad may be a thing of the past!
In this tough market it seems that increasingly first time buyers are buying in partnership with friends and family, in order to share the deposit, bills and stamp duty costs as well as the purchase price. This it seems has become an innovative way to overcome steep mortgage lending requirements.
Some first time buyers have admitted that they have been putting money aside to cover the cost of a deposit for at least 3 years, some have been saving for up to 6 years and others for up to 10 years.
However, many first time buyers still need help from elsewhere. The survey revealed that a third of those receiving help said relatives were paying at least 50% towards the deposit.
Ian Bythell, head of Lancashire estate agency chain Petty’s, said “first time buyers are often relying on granddad and grandma, it is amazing how often grandparents are coming in to the office with them.
In conclusion these findings show just how difficult it is for young people to get on the first rung of the housing ladder as prices remain high and income stagnates.
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