Pitfalls of the house buying process revealed

Wednesday, 13th June 2018, 10:56 am
Updated Wednesday, 13th June 2018, 12:01 pm

Buying a first home in Britain is still very difficult for most, according to a just released First Time Buyer Index.

Of those currently looking to buy their first home, almost nine in 10 (89 per cent) think it is difficult to get on the property ladder – slightly down from August 2017 (93 per cent).

Specialist bank Aldermore found that raising a deposit is still the number one obstacle for four in 10 (40 per cent) of prospective first time buyers, up from 34 per cent in August last year. The number currently living with friends or family in order to save for a deposit has increased, from 23 per cent in August 2017 to 27 per cent in 2018, whilst a further third (33 per cent) would consider it if it meant they could get on the property ladder quicker.

Concern about mortgage affordability has dropped since last year (from 12 per cent to five per cent), but for one in 10 prospective first time buyers, actually securing a mortgage is the biggest concern – this remains on a par with last August (9 per cent). In reality, one in four first time buyers were refused a mortgage when they first applied through their main bank, with this most prevalent in London where nearly half experienced this.

Even when a mortgage has been approved, it doesn’t mean the dream home is just around the corner. Nearly half of first time home owners said they have had at least one property purchase fall through. This is up significantly from August last year, when only 26 per cent said they had experienced a property purchase fail.

Of those who have experienced a purchase fall through, the average loss on fees and other costs was £2,200 – this equates to a cumulative figure of £2.3 billion for those who bought in the last three years. Four in 10 (39 per cent) took more than one attempt to buy and for one in 10 it took three. This has resulted in two thirds (65 per cent) of first time home owners having to delay buying their first home, with almost a quarter having to delay by more than a year.

It is unsurprising therefore that for nearly one in 10 first time home owners, the general uncertainty of the buying process was the hardest part of buying a house, so much so that for just over half, the process made them ill, and for 46 per cent it caused tensions and issues within their relationship.

It’s not all negative though, with almost eight in 10 saying that owning a home has made them more financially stable which allows them to better plan for the future (83 per cent). For 81 per cent, not having to waste money on rent is seen as a massive bonus. Additionally, most first time home owners feel confident they will be able to move up the ladder when the time comes .

When thinking about what the government could do to make things easier for first time buyers, 41 per cent believe the seller should pay stamp duty instead of the buyer and 16 per cent would like an abolishment of stamp duty entirely in favour of a different type of tax. A quarter would like to see more building on the green belt and 23 per cent would like more prefabricated homes available for first time buyers.

Charles McDowell, commercial director, mortgages, said: "It is apparent from our latest Index that the house buying process leaves a lot to be desired. The housing market is in a state of flux and first time buyers are still clearly finding it difficult to get on the housing ladder leaving them anxious, stressed and out of pocket. That said, we have been encouraged by the Government’s renewed focus on the issue of housing with the recent review into the house buying process, although it is too early yet to gauge real impact.

“We believe the real crux to fixing the broken housing market is to improve and increase housing stock. While the Chancellor announced some measures to build new homes in the Autumn Budget last year, given the government’s record on house building, it is necessary to make some serious progress. We need real action and results, not more consultations and whitepapers.”