First-time buyer activity soars
House sales to first-time buyers have risen to a two-year high, according to the latest research.
The First-Time Buyer Tracker from Your Move & Reeds Rains has reported a surge in transactions from first-time buyers: 32,300 first-time buyers bought a home in April 2016 – the highest figure since June 2014.
April’s figure is up 14.9% on the previous month, when 28,100 first-time buyers bought a home. Compared to January 2016, the number of transactions has risen by a whopping 50.9%, when just 21,400 buyers bought their first homes.
Compared to a year ago, completed transactions by first-time buyers have risen by 37.4%. April 2015 saw just 23,500 first-time buyer completions, meaning 8,800 more first-time buyers got on the housing ladder this year.
Adrian Gill, director of estate agents Your Move and Reeds Rains, says: “This surge in sales shows that demand is steadfast among first-time buyers – despite upward movement in house prices. In the short term, first-timers may be finding that competition for properties has eased slightly following a period of intense pressure on landlords to meet the stamp duty surcharge deadline at the beginning of April.
“With a chronic shortage of homes, one man’s loss is another man’s gain. Subdued landlord demand, following the changes, is offering some temporary light relief to first-time buyers. Less competition from landlords expanding their portfolios means more houses to buy for first-timers,” he adds.
However, it seems that first-time buyers are paying more for their first home, spending an extra £20,000 on a property compared to a year ago. First-time buyers spent £168,656 in April 2016 compared with £148,483 in April 2015 – a difference of £20,175, or 13.9%.
Rising house prices have also pushed up the average deposit first-time buyers paid over the last 12 months. First-time buyers paid on average £27,290 as a deposit – £3,300 (13.8%) more than the £23,990 paid in April 2015.
Unsurprisingly, given the high property prices in the capital, first-time buyers in London paid more for their homes, spending an average of £322,613 in the three months to April 2016. First-time buyers in the South East also paid more than average for their property at £215,444.
In other areas of the UK, prices for first-time buyers were below £200,000. Northern Ireland was the cheapest region, with an average price of £99,860 paid by first-time buyers in the three months to April 2016 – the only region where a first home was, on average, less than £100,000.
When it comes to areas first-time buyers head for, the South East was the most popular with 16,300 buying a property in this region in the three months to April. This was followed by London, which had 11,300 sales, the North West (8,500), Scotland (7,500) and the West Midlands (7,000).
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.
The catch-all term applied to investors who buy properties with the sole intention of letting them to tenants rather than living in them themselves, with the proceeds from the let usually used for the repayment of the mortgage. Buy-to-let investors have to take out specialised mortgages that carry higher interest rates and require a much bigger deposit than a standard mortgage. Other expenditure can include legal fees, income tax (on the rental profits you make), capital gains tax (if you sell the property) and “void” periods when the property is unlet.