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It’s common for first-time buyers to feel nervous when purchasing their first property. The process of trawling through papers, negotiating with agents and dealing with additional costs can potentially be off-putting. There are also the questions of: where to look, who to choose, where to start, and so on.
One of the factors behind the major frustrations that first-time buyers experience is the gaps in knowledge when it comes to the buying process.
In its 2016 Home Buying Survey, Natwest asked 2,025 UK residents aged between 20 and 45 about their experience and knowledge of the homebuying process. Participants ranged from existing homeowners to first-time buyers. The results suggested a lack of positivity towards the housing market that acted as a barrier for first-time buyers in particular.
The study revealed some common elements that prevent potential buyers from getting on the property ladder. Over a third (36%) of people who don’t own a property believe they will never be able to buy a home, while some overestimated the extra cost of buying a property by 59%. Some 25% of respondents were not even looking to get on the property ladder.
So, why is this the case?
Financial difficulty, the stress of the moving process, and finding a suitable property served as the biggest barriers to buying a new home. Nearly half (48%) of potential buyers named financial reasons as the biggest barrier. Saving for a deposit, finding an affordable property and securing a mortgage can all be daunting prospects. In fact, 20% of non-homeowners didn’t even consider setting money aside for unexpected costs.
This has led to buyers having a pessimistic outlook on the future, with 82% of participants thinking Brexit will make it harder to buy a home, and only 26% believing the UK will have more homeowners in 10 years’ time, than now.
However, despite only 8% of participants being able to explain all the elements of the homebuying process, first-time buyers found estate agent fees (89%), removals (52%), and maintenance (56%) the easiest aspects to explain.
That’s not to say there aren’t aspects of the buying process that prospective buyers find difficult to understand. Almost 30% of all participants had a limited understanding of the stamp duty system. Some 29% of first-time buyers found mortgage indemnity fees hard to explain, compared with 16% of homeowners. Conveyancing was also a hard prospect for 23% of potential buyers, as well as stamp duty (19%).
Stamp duty seemed to be an issue across all age groups. More than half of participants looking to buy a property completely overestimated the cost of stamp duty, while 77% of people were unable to give the correct rate of stamp duty on a property worth £120,000.
These figures are a true testament to the uncertain mindset of some potential buyers, and how knowledge gaps can result in a negative stance on the housing market.
The answer? Research, research, and more research. Doing your homework is critical to understanding all facets of the buying process. By knowing the ins and outs of deposits, mortgages, homebuying schemes, moving costs, stamp duty, removals and additional costs, you will begin to chip away at the tip of the iceberg.
Here at Kings Group, we provide guidance on buying a property in North London, East London, Hertfordshire and Essex. For more information, contact your local Kings Group branch today.
And to find out how much your home could be worth on the current market, you can request a free instant online valuation.