overpay mortgage

First-time buyers pushed back towards renting as costs rise

While rising house prices are one thing, the initial costs that must be forked out within the first year of homeownership are now soaring for first-time buyers.

First-time buyers were the biggest beneficiaries of the stamp duty changes back in September, which saw the nil-rate threshold raised to £425,000. Yet as the cost of everything else continues to creep up, this change might not be enough to persuade many prospective homeowners onto the property ladder.

Rising mortgage costs, large deposits, utility bills and annual maintenance are all putting a dampener on first-time purchase plans, and new research has revealed the true cost of property ownership in that first year.

GetAgent.co.uk has found that the total cost of the initial year of homeownership is £75,801, which is a colossal figure for first-time buyers to factor in. As such, it seems, the rental sector will continue to be a crucial factor in housing people until they have the funds to buy.

How are the costs broken down?

The research breaks down the total outgoings of first-time buyers by looking at all of the one-off or annual costs that must be considered when buying a home.

With the average property in England currently costing £315,965 by their data, a 15% mortgage deposit on such a home would set the buyer back by £47,395.

As mentioned, stamp duty for first-time buyers only kicks in for properties priced above £425,000, but for those who do need to pay it, GetAgent.co.uk estimates that the average amount paid is £3,298.

It marks out the average cost of maintaining a property – regardless of whether you are a first-time buyer or another homeowner type – at £3,160 per year. Mortgage repayments then come in at an average £19,029 per year, while gas, water and electric was £2,919 per year when this study was conducted.

Unsurprisingly, the cost of the first year on the property ladder is significantly higher in London – at an average of £139,787 in that first year. Other parts of the south east also came in high on the list, while County Durham was the cheapest area to buy.

A huge financial commitment

Colby Short, CEO and co-founder of GetAgent.co.uk, said: “The high cost of homeownership is certainly nothing new but many homebuyers may be surprised at just how much a property will set them back during their initial year of homeownership.

“A mortgage deposit remains by far the highest cost associated with a property purchase and the additional running costs such as utilities and maintenance can often be an afterthought. However, when you do take them into consideration, it gives you a far clearer picture of the financial commitment you are making and this is extremely important, particularly in the current market,

“Many buyers are now feeling the squeeze where the cost of repaying their mortgage is concerned. When you also add the fact that running costs such as utility bills have also spiralled, those who have overstretched when borrowing are now in a very difficult spot.

First-time buyers may need to rent for longer

According to Rightmove research, there has been an ‘exodus’ of first-time buyers in the market over the past couple of months, as people react not only to political announcements but to the rising cost of living and mortgage rates.

Tim Bannister, Rightmove’s director of property science, said: “Though many are getting on with moves, especially those with a purchase already agreed, understandably there are people who are pausing for thought.

“There’s a group who are ready and able to move and are waiting on the sidelines for more financial certainty. Then there’s a group of first-time buyers or people hoping to trade up who were already stretching themselves financially and may now have had their plans dashed.”

It is inevitable that huge numbers of these would-be buyers will put pressure on demand in the private rented sector, with some moving into it for the first time while others make longer-term commitments to rent.

Self-certified Sophisticated Investor

Please read

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:

I am a self-certified sophisticated investor because at least one of the following applies:

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me seek advice from someone who specialises in advising on non-mainstream pooled investments.

High Net Worth Investor

Please read

I make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me:

aerial-view-uk-houses

緊貼市場趨勢

立即登記搶先獲得最新項目及獨家物業投資機會。

我們會定期發送電子通訊,介紹最適合您的全新發布項目及獨家優惠。 我們受到超過 30,000 名活躍買家的信任,不斷更新最新英國物業市場資訊。

  • 最新發展項目及獨家優惠
  • 樓市走勢專業分析
  • 物業市場成交數據
  • 項目建築進度定期更新
UK holiday let

最新最快英國樓市新聞。

追蹤我們最新樓市觀點,爲您提供前瞻性的建議和分析。

自 2005 年成立以來,我們是英國地產市場權威,提供前瞻性的建議和分析。我們的英國物業資訊獲得 Apple News 及 Google News 授權發佈。

  • 英國樓市趨勢
  • 按揭申請攻略
  • 業主放租須知
  • 物業指南及投資建議

請即聯絡

立即聯絡我們英國物業專家查詢更多:

 

+852 6699 9008

辦公時間 9am-6pm