First Time Buyers 10 Ways to Get on the Property Ladder!

publication date: Sep 18, 2012
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

So if you are a first time buyer, is now the right time to jump on the property ladder?

There are an awful lot of mythical, scare mongering headlines being put about which are currently convincing many potential first time buyers to not even bother investigating getting onto the property ladder.

Scary statistics such as "the average age of a first time buyer" are often misquoted by the industry and the media and a quick Google search reveals stories of first time buyer's now being 37, 38, 40 and even 43! Some of these figures don't even have a source, others have different definitions. For example, some of the ages comes from qualitative research which just asks people who hadn't bought yet how old they thought they would be before they could afford a home. Some depend on whether they have financial assistance or not, and others are based on different agents people can buy across different regions in the UK.

The real figures are quoted though by the Council of Mortgage Lenders. Their data shows:- 

  • The highest proportion of first time buyers (buyers under 30) was 37% in April 2005
  • The lowest proportion of first time buyers (buyers under 30) so far was 29% in July/Aug 2010
  • Currently from Jan-June 2012, first time buyers account for 32% of house purchases

A review by CML of First Time Buyers in December 2011 revealed:-

"On average, interest paid by a first-time buyer taking out a mortgage in Oct 12 consumed only 12.3% of income"
"Average deposits now stand at 20%"
"The size of deposit has doubled since 2007, when it averaged around £13,000, or 37% of annual income"
"Since 2005 the number of first time buyers buying without assistance fell from 69% to approximately 62% in 2007"
"Since 2007 the number of first time buyers buying without assistance has fallen from 62% to 36% in 2011"
"Since 2005 the average age of a first time buyer has remained static"

First Time Buyer Age Chart

Due to a new statistic approach, CML believe they can "consign this misleading figure of 37 to oblivion and more unambiguously estimate the average age of an unassisted first-time buyer at 33"

Unfortunately the downside of using scary stats is it can have the effect of making the younger generation think it's impossible and not even worth investigating buying a home. In fact, we are already calling them "generate rent" - hardly helpful in trying to boost market activity in buying and selling!

So for anyone that thinks they will never be able to afford a home, here's my top 10 ways to get onto the property ladder for first time buyer's everywhere. 

  1. Save as much as you can
    At the moment, it's tough to get decent mortgage rates without a hefty deposit. However this won't always be the case. Prior to the credit crunch, first time buyers could secure mortgages with just a 5% deposit. You can buy a one bed flat in Hackney in London for just £150,000 so at 5% that's a deposit of £7,500.

    A two bed flat or house in Manchester would cost you £100,000, so a 5% deposit would be £5,000 and in Bristol would be around £125,000 so just £6,250.
  2. Find a property to buy with zero deposit
    Think they don't exist - they do! One housing association is offering to sell a property to you without taking a deposit. Instead you buy under "The Genie Home Purchase Plan" which is an "innovative 25-year structured payment plan which enables you to move into your new home and watch your interest grow over time."

    Although these deals are only available from Justaskgenie in the North East, hopefully more housing associations or developers may adopt this method of selling a home, so watch out for offers in your local area!
  3. Find a shared ownership deal 
    There are lots of offers from housing associations and private developers and new build homes aren't the uninspiring boxes they used to be, so it's worth taking a look at what's available to you:-

    Here's a first time buyer deal in Croydon:  Swallows on the Godstone Road
    Here's some new deals in Birmingham: Halesowen and Northfield
    Here's a deal in Cardiff: Whitchurch
  4. Find a deal from a developer and buy 70% of the home
    Some developers are keen to sell their properties, but rather than drop the price and potentially lose money on the deal in the short term, you can buy 70% of the home.

    For example, Miller Homes run a scheme called ‘Miway'. If you qualify for the scheme, you can buy just 85% of the home, pay a deposit on the 85% and Miller give you a top loan for the remaining 15%. After a period of 10 years, or if you sell, you pay back the 15%. In the first five years there is no interest payable, then you'll pay 4% on the loan on a monthly basis. For more information visit Miway.
  5. Move away from where you live now
    Moving away from where your friends and family are might seem a bit tough, but it's what people have been doing since homes were being bought by the masses back in the 1950s and 1960s. Don't forget, before WW2 we were a nation of renters!

    For example, if you live in London but can't afford what you want or you are hankering after building your own home, why not head to Peterborough where you can find an end of terrace two bed property for less than £100,000!

    If you want a rural idle but don't think you can afford it, perhaps you could move your job to another part of the UK or if you work virtually and are self-employed, you might even be able to bag a bargain abroad!  For example, if you move out towards Newark in Nottinghamshire, this lovely two bed cottage is in a village called Claypole, for sale for just £115,000! Better still for anyone from London, it's just a few miles to the station which is on the East Coast  Line and takes just an hour and half into Kings Cross, so no excuses for not visiting them!
  6. Buy a property elsewhere and rent it out
    This might seem an odd thing to do, but if you are renting now and can afford a property somewhere else, but not where you live and work, buying a property in an area which will grow in value may help add to a future deposit to put down on a property where you do live. Alternatively it might be somewhere where you'd like to retire to in the future.

    For example, you may live in an expensive city, but be keen to retire or move to a rural location in Scotland at some point, so a place like beautiful Perth where you can find a lovely property for less than £150,000.
  7. Buy with a mate
    One of the reasons it's more difficult to afford a property now than it used to be is more people are trying to get on the housing ladder by themselves as opposed to with a partner. One of the biggest triggers to buy a house in the past was to get married. This was inevitably followed by having children, so people needed a separate home.

    The average age to get married is now is around 31 years old versus 23.5 years back in 1981, 30 years ago. So rather than get married to afford a property, which is a little drastic, why not buy with a good pal? This was how Kate got onto the property market back in the last recession in the 1990s.

    If you go down this route, you need to have a plan and ideally a contract drawn up in case you fall out or one of you does fall in love and decide to settle down. You need to agree how the property will be valued and what to do if the other one can't afford to buy your half of the home. Finally you must buy under ‘tenants in common'.

    For help buying with a friend, contact us with your area information, what you can afford and the circumstances and we'll help guide you through the process.
  8. Buy with the family
    If you get on well with your parents, grandparents or even aunt and uncle, why not look at buying a property with them which either has an additional property in the grounds or it's possible to split the property into different living quarters?
  9. Speak to your landlord
    If you are renting a home now you'd like to own, then why not have a chat with your landlord? They may be looking to sell it in the future and you might be able to agree a price now and do a deal to buy them out. This might be paying more rent and a lump sum when you can afford to buy. It's a complex legal deal and you'd have to protect yourself from anything happening to the landlord, so you'd need to have a good solicitor. Interested in finding out more? Contact us to find out how deals can be structured. 
  10. Build your own property
    Think this is out of your reach - it isn't! It is however hard work and will take up your time and increase your stress levels! However if you really want your own property, it is possible to save a fortune building rather than buying a ready-made home.


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