If you're a first-time buyer this year, you'll be well aware of how difficult it is to secure a decent house price right now, to say nothing of other obstacles facing those trying to get on the property ladder. Amid the coronavirus pandemic, mortgage approvals have fallen, while house prices continue to rise, albeit at a slow rate. The house price crash that was predicted immediately after Covid-19 has yet to materialise, while mortgage lenders now expect higher deposit amounts as standard.
What can a first-time buyer do to overcome these obstacles and get a house at a good price this summer? Check out the latest advice from Phil Spencer plus tips from property experts* below, for first-time buyers to follow when buying a house.
1. Budget carefully
Be aware of what costs you'll need to cover on top of the house price, and start all negotiations with that knowledge. There will be a number of initial fees such as the valuation fee and the surveyors fee, as well as the additional parties to pay such as the lender/broker fees (if first time buyer, no estate agents fees) and the conveyancer.
There are is then the fees associated with the mortgage including the booking fee, arrangement fee and mortgage valuation fee. We recommend saving an additional £2,500 on top of your deposit to cover the costs. Please be aware that if more than one person is purchasing and they have already owned a property then stamp duty will be payable even though the other person has never owned a property anywhere in the world before.
2. Be realistic in how you negotiate
We'll be very honest and say that asking a seller to reduce the price purely out of expectations of a post Covid-19 discount won't do you any favours. As property expert Phil Spencer puts it in an interview with Hello! magazine,
'That is taking advantage of the circumstances. In actual fact, the prices have not fallen yet, so in trying to renegotiate the price you agreed before lockdown, you are asking them to anticipate a fall that hasn't happened yet. That’s quite a lot to take on board as a seller… I think it's pretty rude to instigate that conversation yourself.'
All the available data shows that, in the vast majority of cases, the pandemic has not led to a reduction in asking prices. If you want a home in a prime area and in perfect condition, and with a garden, you are highly unlikely to get much give from the seller.
If you are hoping for a reduced price, you will have to compromise on something, whether it's location, the condition of the property, or its size. If you get the sense that the current owners are keen to sell, do negotiate, but be reasonable: trying to knock off much more than 10 per cent is likely to make you sound like you're not serious about the purchase.
3. Uphold good communication with your agents
Ensure you are always kept in the loop with the seller, your estate agent, mortgage advisor and conveyancer. When you have decided on a property, you want the process to be as smooth and hassle free as possible, so don’t be afraid to keep pestering your agents. Remember: the agent is mainly on the seller's side, so it's important to establish a rapport with them.
In the same way, make sure to keep your phone on at all times in case you need to be informed of any major turning points. Additionally, keep up to date with your emails, including checking your junk, as conveyancers will often send over documents via email.
4. Try buying at auction
Buying at an auction can be a great way to buy a property with potential at a good price. You will need to mentally prepare for a doer-upper, though, so this option isn't suitable if you were hoping to move into a home that needs no work. Also, at the moment house auctions are conducted online or over the phone. Some properties will have virtual viewings available, and you'll need to get in touch with the auctioneers directly to see what's possible. It is a gamble, but it could land you a promising property at a discounted price.
Find more about how to buy a house at auction.
5. Don't automatically think moving out to the country is best
It is true that house prices tend to be lower outside the major cities – but is an escape to the country really practical for you? Instead of just focusing on the house prices in relation to the size of the property, you will need to think about transport or fuel and car costs: even if you're planning on working from home permanently, you'll still need to think of how you'll get places to get food and other supplies. Also think about the cost of any work that'll need doing to the property, as that could add a substantial amount to the overall cost of the property.
6. Consider using the services of a buying agent
A buying agent is basically the counterpart for the estate agent, working on behalf of the buyer. Not only will they help you find the best property for your needs, but they will negotiate hard on your behalf (something not everyone has the experience or temperament for doing themselves). Habito Go is one such service – get in touch with them to see how they could help you get a house at a better price.
*Tips one and three generously provided by JMP Solicitors