First Time Buyers

This may seem like an obvious question but it is important to clarify whether you do qualify as a first time buyer.

The eligibility includes:

• Someone who has never owned any residential property anywhere, whether that is owning your own home, with or without a mortgage, or a buy-to-let property.
• If you are an individual buying on your own and the above applies, you can qualify for the benefits of being a first time buyer.
• If you are a couple, and both of you have never owned property before, once again you can receive the benefits of a first time buyer.
• However, if you are buying with someone and they have owned property before, you do not qualify as a first time buyer if you will be owning with them.
• The property you are buying must be your main residence.

The Government has for many years recognised the barriers that first time buyers face in buying a property and as such has implemented various support schemes in recent years.  The current schemes available to first time buyers include:

• Help to Buy Equity Loan 2021-2023 – this scheme helps first time buyers by providing an equity loan of up to 20% of the value of a new build property. As the buyer, you would raise a 5% deposit with a 75% mortgage making up the rest.  Under this scheme, you would legally own all of the property.
• Shared ownership – under this scheme you would only purchase a share of the property, meaning you would only legally own that share. This is usually offered through housing associations, with you purchasing between 25%-75%, paying a mortgage on this and a subsidised rent to the provider on the rest.  The deposit you need to contribute will be between 5-10% of the share you are purchasing, not the whole value of the property.

There is another option in the form of a Lifetime ISA, which can help you save money towards your first home.  You can open and make your first contribution to your LISA at any time between 18 years of age and 40, contributing up to £4,000 each year until you turn 50.  The Government adds in a 25% bonus up to a maximum of £1,000 per year.  When the time comes for you to buy your first home, you can use your savings if all of the following applies:

• the property costs £450,000 or less.
• you buy the property at least 12 months after you make your first payment into the Lifetime ISA.
• you use a Conveyancer or Solicitor to act for you in the purchase.
• you’re buying with a mortgage.

As with any large purchase, there will be a multitude of considerations, including:

• Research mortgage deals – understanding your financial position is crucial so you can budget and look for properties that you can realistically afford.
• How much deposit do you have – discussing your mortgage options will be influenced by how much deposit you have. You may have enough deposit for certain lenders while others will require more.
• Be realistic about what you can afford – Once you have the price bracket of the property value you can buy, do not neglect the longer term financial costs involved in property ownership, such as the mortgage payments, utilities, transport costs etc.
• Do not rush into making an offer – we know that once you have found a home you will be eager to make an offer, but always take the time to consider the wider implications, the location, the neighbourhood, the transport links etc. Having a list of your priorities before you start viewing properties can help ensure you find the right property for you.

Stamp Duty Land Tax (SDLT) is a tax that is paid on all properties in England.  If you are a first time buyer, you will not be required to pay SDLT on the property if it is valued at less than £425,000.  This differs to other home purchases when SDLT is applicable on properties valued from £250,000.

If the property you are buying is over £425,000 you will pay 5% on the remainder of the sale price up to £625,000.  Anything over £625,000 is then charged at the normal SDLT rate.

If it is applicable, you will pay SDLT at the time when you complete on the property; this will be one of the tasks that your Conveyancer or Solicitor will do on your behalf.

Buying a home is a significant financial commitment and you should budget for the following payments:

• Deposit
• Stamp Duty Land Tax (SDLT) if applicable
• Land Registration Fees
• Searches
• Legal fees
• Surveys
• Mortgage advisor fees
• Valuation fees
• Removal costs
• Insurances such as buildings insurance

Anyone buying a property needs a survey to be done on the property they are buying.  This is the responsibility of the buyer, not the seller, and it is completed to understand the condition of the property and highlight any potential problems for the buyer.  This is usually done once you have made an offer and it has been accepted.

There are several different surveys available to you and the most appropriate one will depend on the property you are buying:

• Royal Institute of Chartered Surveyors (RICS) Condition Report – if you are looking to buy a modern property that is in good condition, this report will be sufficient to give an overview based on a traffic light system.
• RICS Homebuyer Report – this survey will provide a general overview but will also give an indication on any matters that could impact the value of the property, such as damp and subsidence risks or if there are any suggestions on repairs and maintenance that will be needed in the future.
• Building or Structural Survey – this type of survey is the most thorough and is generally used for older properties or if they are in poor condition.

You can find out more details in our guide to property surveys.

Once you have moved in to your home and celebrated, you will need to ensure that the relevant organisations have your up to date contact information, for example the local authority, utilities, bank, DVLA etc.  We would always recommend that you consider the legal implications of property ownership and put in place documents that can protect you and your future, including a Will, Lasting Power of Attorney and a Declaration of Trust.