Widespread economic uncertainty has taken a significant toll on existing homeowners, but none more so than aspiring buyers currently stuck in generation rent. Following the Bank of England’s recent interest rate rise, a high not seen in three decades, alongside soaring inflation, the housing market is looking to be more inaccessible than ever. Research from Rightmove revealed that as mortgage rates edged higher in October, first-time buyer demand dropped by nearly a third. The current outlook of the market is already having a material effect on the mental health of the nation, with a staggering 42% of Brits stating that their biggest anxiety is that they will be stuck renting for the rest of their life – this figure rises to 47% for millennials. In the face of the longest recession, Britain has seen in 100 years, the property technology company, iPlace Global, has created the definitive guide to help first-time buyers navigate the peaks and troughs of the ever-changing trends of the UK’s housing market.

The ultimate four-step guide for first-time buyers struggling to navigate the housing market

Make sure you’re prepared for the home-buying process:

iPlace Global’s latest study reveals that 26% of landlords are looking to sell their buy-to-lets due to increasing running costs, with many opting to sell off two to three-bedroom properties – which is also the average property size for first-time buyers. Whilst house prices have seen exponential growth in the past few years, experts are now projecting that this bubble could be set to burst. Serving as a clear testament to this, a recent report from Halifax revealed that the average house price fell by 0.4% in October, compared to a 0.1% decrease in September.

In light of this, Simon Bath, property expert and CEO of iPlace Global, is advising aspiring buyers to take this opportunity to gain a better understanding of the home buying and moving process. Bath explains that it’s important to educate yourself about the various procedures that come with purchasing a home, such as conveyancing, insurance and relocation costs, for instance, as this will create a more efficient and swift process when you’re looking to buy a home.

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Find the right mortgage deal for you:

Whilst a year ago the average two-year fixed mortgage deal stood at 2.25%, this has leapt above 6% in recent weeks. The good news is that this climate has prompted many lenders to increase customer support and provide longer-term plans in order to help borrowers keep up with rising costs.

Bath explains that it is important to choose a mortgage deal that suits you best, whether it’s based on peace of mind or flexibility. Given the cost-of-living crisis, it’s important for prospective homeowners to factor in the constraints around affordability. For instance, tracker rates offer greater flexibility for homeowners due to their short lifespan anywhere from two to five years – although some lenders offer trackers for the whole duration of your mortgage repayments or until you switch to another deal. A standard variable rate also offers greater freedom for homeowners as they have the ability to leave at any given time.

A fixed-rate deal, however, offers borrowers a greater peace of mind – 75% of Britain’s homeowners are on fixed deals, meaning they’re not directly affected by the base rate. However, these deals often last for a longer period, and if you break your agreement, you will need to pay an early redemption fee.

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Shared property ownership could be an affordable option for first-time buyers:

An alternative option for those looking to get onto the property ladder right away is shared partner ownership. Owning a property as beneficial joint tenants means that the property belongs to both owners jointly. The tenants must act together as a single owner for all transactions, including re-mortgaging and selling. As joint tenants, the owners do not own specific shares in the property and do not have the ability to give away a share of the home in a will. If either owner passes away, their interest in the property passes automatically to the other party.

Individuals can also own the property as tenants in common, meaning that the property belongs to the owners jointly, but each person also owns a specific share of its value. An owner can give away, sell, or mortgage their share, and if an owner dies, their share of the property passes to the beneficiary in their will.

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Keep Your Eye Out for Regeneration Projects:

When looking for an area to buy in, keep your eye out for regeneration projects, especially after a report from CBRE found that houses in these areas enjoy almost 5% above the average price growth. This means that your home will likely grow in value after purchasing which could provide you with some much-needed spending power if you ever decide to sell and upsize.

Simon Bath, CEO of iPlace Global, comments on how first-time buyers can take advantage of the current state of the housing market: 

“It’s clear that those stuck in generation rent are struggling the most amidst current housing market conditions, with our research highlighting the significant effects it’s having on their mental health.

“Prospective buyers should take the time in the run-up to the new year to fully understand the various procedures involved with buying a home. Becoming educated on the process will ultimately save you in the long run from overpaying by thousands, as well as give you a significant advantage over your competitors. Given the volatility of the market, it is more important than ever to ensure that Brits are saving whenever they can so that they get the best possible deal.

“There has been some more encouraging news to come out of the housing market recently, especially for first-time buyers – with prices falling last month at the fastest pace since February last year. This, combined with the government’s recent stamp duty cut, could begin to put some properties back within reach for those stuck in generation rent. 

“The government must ensure that support is provided to those looking to buy their first home at all ends of the scale amidst constant uncertainty. New schemes must be introduced to replace discontinued ones like Help to Buy, especially for those currently on the outside of the market looking to make their way onto the ladder.”

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