First-Time Buyers are More Active Since the Stamp Duty Cut, Plus More

Welcome to the latest edition of the David Doyle newsletter.

This month, first-time buyers are more active since the government announced cuts to stamp duty, the number of home movers is at their highest levels in a decade and we share an introduction to joint mortgages.

First-Time Buyers More Active Since Stamp Duty Cut

 

The property market is usually quieter during December as many are winding down for Christmas; however, it appears that first time buyers took advantage of this quiet period.

New figures from the National Association of Estate Agents (NAEA) show a large number of prospective homeowners rushing to the market during the most recent Christmas period.

In December of 2017, the number of people registered with an estate agent to look for a home saw a drop by 20%, with sales taking a fall also. This is to be expected, as it is very common for many home movers to delay any transactions until the New Year.

It seemed to be quite a different story for those looking to buy their first home, as December 2017 saw a rise in first-time buyer sales by a substantial 32%, the highest peak since September 2016 and up from 27% in November.

The survey from the NAEA also revealed that the supply of UK properties hasn’t changed much at all, not meeting the new surge or first-time buyers coming to the market as the stock of each estate agency branch decreased by only one, to an average of 33 properties per branch.

It was also found that home hunters and transactions overall saw a dip in December. Registered prospective homeowners fell from an average of 333 to 268 per branch in the final month of the year and sales agreed per branch fell from seven to five from November to December.

December also saw a reduction in transaction times, with the number of sales completed in less than 4 weeks quadrupling and the number of sales taking longer than 17 weeks almost reduced by half.

Chief Executive of the NAEA, Mark Hayward, spoke about the findings of the survey. Hayward believes that these could be the first signs of the stamp duty cut having its effect “It looks like that’s what we’re starting to see. Hopefully, this enthusiasm won’t falter when the second and third-time buyers come back onto the market and competition hots up again”

Number Of Home Movers At Their Highest In A Decade

 

Activity within the UK property market seems to be on the rise of late as the number of property transactions in 2017 were at their highest since 2007.

Recent figures from Lloyds Bank have revealed that just over 370,000 people moved home last year, which is not only a 2% increase on the number of transactions from the previous year, but also the most amount of transactions seen in a decade before the financial crisis.

While this is the highest level of activity seen in quite some time, it is still a ways off the reported 653,000 movers seen in 2007; however, the growth in 2017 is definitely a positive sign, amongst the current economic uncertainty.

The research from Lloyds bank also showed that the average deposit broke &100,000 for the first time in 2017 and the average in London almost surpassed &200,000.

The average price paid for a home in 2017 stood at &296,731, a &6,000 increase on the figure seen the previous year.

According to Lloyds Bank, there are a few factors that may be contributing to the rise in activity such as low mortgage rates and high employment levels, making the process more affordable for buyers and the continuous growth of house prices over recent years have provided vendors with a substantial amount of equity.

Every region of the UK, except for greater London, saw an increase in property transactions with the south-east topping the table of movers with 65,400 people deciding to trade homes last year.

Mortgage products director at Lloyds Bank, Andrew Mason, believes that this increase in activity is due to rising house prices.

Mason commented, “House price increases will have boosted equity levels for many homeowners, enabling movement along the housing ladder…

“Taking advantage of increased equity levels by putting down a bigger deposit can really make a big difference towards what home movers can afford. It can be the difference between a good home and the right home.”

CEO of Emoov.co.uk, Russell Quirk also spoke on the latest statistics, stating that it should not be overlooked just how positive of a sign it is that first-time buyers are returning to the market.

Quirk said “While a boost in equity will have also aided many home movers to take the next step, perhaps the most important change the market has seen, is the increasing number of first-time buyers. This is particularly encouraging when you consider the huge barrier of unaffordability not just where the price of a property is concerned, but also the initial deposit required to secure it.

"Over the last year or so, market uncertainty has deterred many from committing to a sale in fear of cashing out too early on their existing asset. It’s this increasing level of first-time buyer demand that has kept the market ticking over as a result of their aspiration to become homeowners, not their desire to profit from their existing home.”

An Introduction to Joint Mortgages

 

 

 

A joint mortgage is a common method for groups of buyers who are looking to share the costs of buying a home. Whether you are a couple looking to buy a home, family members, friends or business partners, a joint mortgage can assist you with dividing up the share of the property and spreading out the monthly mortgage repayment.

You don’t even need to be living with the other party. For example, children and parents will often take out a joint mortgage so that the parents can assist with the cost of buying a first home.

How do I go about getting a joint mortgage?
The process is the same as applying for a regular mortgage. Both parties will be required to attend the mortgage interview and you will both need to provide all the same relevant documents should a lender request them.

The only limitation you may face is if you are applying for a mortgage with more than three people.

How much can you borrow with a joint mortgage?
One benefit of taking out a joint mortgage is because it increases the amount that a lender will be prepared to advance.

Lenders will take both parties income and outgoings into account in an affordability assessment, with most lenders offer a calculator on their website for figuring out the cost.

So how is the mortgage split between the parties?

There are two ways that a joint mortgage can be split.

Tenants in common
Tenants in common allows each party to own a different share of the property. Each party is also allowed to decide who they leave their share to when they die. All parties are required to consent to a sale. This type of policy usually suits friends or family buying property.

Joint tenants
Joint tenants is better suited to couples looking to purchase a property. Each person has a 100% stake in the value of the property. Again, both parties must consent before the property can be sold. If one of the parties dies, the share of the property passes to the other owner.

What happens if one of us stops paying?

Whilst both parties are jointly liable for a joint ownership, the lender won’t care whether the repayment is split evenly down the middle. The other party not paying their share won’t be accepted as an excuse for failure to repay.

Mortgage lenders aren’t interested in which of you has contributed more, they will just expect the payment.

A joint mortgage is a perfect solution for those looking to buy with a second party. Your rights as a co-owner are enshrined within the terms of the mortgage, meaning you won’t need to worry about the security of your share, you can get a bigger advance due to your combined income, and you have assistance with the costs of your mortgage.