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First-time buyers

7. Rent-a-room

If you can afford the deposit but are fazed by the monthly repayments, consider getting a lodger. The cost of a two-bedroom home is never dramatically more than a one-bedroom property, and once settled you are entitled to earn up to £4,250 per annum on a tax free basis under the governments rent-a-room scheme.

8. Renovate

It may be a daunting prospect for many first-time buyers, but purchasing a home that needs work can be very lucrative. The cost of a kitchen or bathroom are less than you might think, therefore giving you the opportunity to add value to the property. Don’t be put off by competition from developers either – in order for a developer to make a profit they need to buy the property at a bargain price due to all of the red tape involved. You, however, won’t be selling your home immediately and so don’t need to realise an immediate profit. Basically, renovating on a small scale can give you the look you want at a price you can afford.

9. Buy off-plan

The trick to buying a home off-plan is timing. Generally speaking, buying off-plan secures you a property for the future at today’s market value. While this makes good sense, there are further advantages to be made if you buy wisely. Developers rely on cash flow, and there are key times when this is more true than others – namely as soon as the project is released and when it is nearing completion. Even if the asking price is fixed, you may be able to negotiate on fixtures and fittings, not to mention the deposit and stamp duty. See our Fact Sheet on Buying Off Plan and New Build.

10. Avoid stamp duty

The current stamp duty threshold stands at £125,000, meaning that any property you purchase for under this price is exempt. While this may be increasingly difficult in London, there is still the possibility to buy in a stamp duty exempt area, whereby stamp duty isn’t payable unless the property is over £150,000. Stamp duty exempt areas are listed on the Inland Revenue’s website (www.hmrc.gov.uk/so/dar/index.htm).

11. Choose your mortgage carefully

There is a wide range of mortgages currently on the market, however there is more to choosing a product than the monthly repayments. If saving your initial outlay is your prime concern, then you need to be looking for a mortgage that doesn’t have any arrangement or administration fees – of which there are plenty out there. If you can’t find one that suits your needs, ask if you can add theses fees onto the mortgage itself – you may even be able to add on conveyancing fees. This will bump up your monthly repayments slightly, but will save you stumping up the cash in the beginning. See our Choosing a Mortgage Fact Sheet.

12. Negotiate

As a first-time buyer you are in a great position, so ensure that you use this to your advantage. Finding that dream home is just as difficult for your vendors, and once they have found it they are unlikely to want to let it go. This means that they may be willing to accept a lower offer from a first-time buyer simply because you are not in a chain – the risk of loosing their next property is perhaps not worth haggling over a couple of thousand pounds.

13. Shared ownership schemes

Housing associations and trusts occasionally operate shared ownership schemes which are designed to aid those who cannot afford to get on the property ladder. Generally aimed at key workers, such as teachers and NHS staff, these schemes involve buying a share of a property, and paying rent on the remainder of the balance. There is the option of buying more shares as and when you can afford to, as well as buying your home outright. However, be aware that when you come to sell the housing association has first refusal – albeit at market value.

14. Rent-to-buy

A relatively new concept in the UK, rent-to-buy enables you to rent a property with half of your monthly rent being put aside on your behalf for a deposit in a few years time. As with buying off-plan, the advantage of this is that you secure the property’s price at today’s market value, with the added bonus of not throwing money away on rent in the meantime.

15. Ex-local authority

Buying an ex-local authority property has numerous advantages, perhaps the most attractive one being price. Recent statistics state that previously owned council homes can be up to 20 per cent cheaper than their period counterparts simply because of their “lack of character”. In addition, proportions are always generous – especially when compared to today’s new-builds. Finally, outdoor space is more often than not catered for, even if it is only in the form of a balcony.

16. Compromise

Perhaps the best advice that any first-time buyer can get is to compromise! If you are finding that fabled two-bedroom garden flat simply too elusive it may be time to rethink your wants and needs. While you may need two bedrooms can you do without the garden? Alternatively, is it more important to have some outdoor space and squeeze the desk into the lounge? Making compromises will get you onto the property ladder quicker – and remember that this is only your first home – not where you are likely to spend the rest of your days. Your first property purchase is simply your first rung on the ladder – treat it that way.

More pages

Page 1: Overview
Page 2: 7. Rent-a-room

Related Articles

• Buying a Property in England or Wales
• Types of Mortgage
• Choosing a Mortgage
• Buying Off Plan and New Build
• Buying at Auction