The property market in the UK exploded over the pandemic, thanks to friendly Government schemes and cheap mortgage rates. While the crisis helped the housing market boom, the overall impact of Covid-19 left first-time buyers scrambling for more cash.
A recent survey done by Aldermore, a banking company, revealed that first time buyers who bought their home in the 18 months since March 2020 experienced an increasingly expensive process, stretching them to raise additional tens of thousands in funds.
Raising a deposit
Aldermore conducted its First Time Buyer Index by surveying 2,015 prospective and 500 actual first-time buyers and revealed that over half (58 percent) of first-time buyers needed to raise a larger deposit than initially intended due to the impact of the Covid-19 pandemic.
The average increase was an additional £22,849, bringing the deposit size up to £62,572 (an average of 18.6 percent of the property value).
According to the survey, it took first-time buyers an average of nearly five years (4.6 years) to save up enough to buy their dream home.
A frustrating process
Due to the pandemic, the process of buying became more complicated with delays and false starts increasing the challenges and expenses.
The survey revealed, two in five (40 percent) FTBs took two or more offers to secure the home they bought, stretching out the process and raising costs. Before that, half (49 percent) were in the process of buying a different property only to have it fall through. This cost new buyers an average of £2,403, with one in nine (12 percent) spending £4,000 or more.
Increased challenges and multiple attempts at buying meant first-time buyers faced a delay of an average of three months, with one in six (16 percent) getting delayed by over five months or more to move into their new home.
These extra barriers and costs meant that nearly half (48 percent) felt they did not get the home they wanted because they had to compromise so much to get on the housing ladder.
Meanwhile, the financial impact forced over half (52 percent) to leave their house empty for a few months because they were unable to afford furniture immediately.
The stress of the house buying process also affected people’s personal lives, with nearly half (46 percent) saying that the process caused issues in their relationship.
Apart from raising the deposit, buying a property also includes various other expenses such as solicitor fee, housing valuation, payment to the estate agent, etc. These extra costs set the average first-time buyer back by a total of £4,486.
Additional costs of buying a home
Average per first time buyer
Conveyancing fees/ valuation
Moving fees i.e. van hire, moving company hire
Rent paid due to delays in moving into your home
Estate agent fees
Jon Cooper, head of mortgage distribution at Aldermore said: “Becoming a homeowner is a wonderful step forward in a person’s life, but our research shows the persistent effects of the pandemic are causing high levels of financial challenges in the journey.
“I would advise would-be buyers to plan carefully to ensure they are prepared for the range of costs involved and to seek a broker who can be a great help in cutting through the jargon and guiding you through the process.”
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