The reasons for this are twofold. Firstly, the increase in house prices understandably makes saving for a deposit and in turn purchasing a property more difficult. Secondly, and perhaps less well documented, is the unwillingness of banks to lend significant amounts to first time buyers following the financial crisis. Financial regulation has focused on mortgage lending and significantly curtailed the industry over the past decade.
It is the younger generations, usually needing the highest loan-to-value ratios and loan-to-income ratios, who are most affected. In the UK, only 5% of housing equity is owned by the under 35s. With rising prices and higher deposits, there are now a generation of buyers who are relying on gifted deposits from family members. A gifted deposit is when somebody, usually an older family member, gives a buyer a sum of money towards their deposit. Without this assistance, many first-time buyers are unable to save the required funds for a deposit until their thirties.
Legislators have tried to combat this generational imbalance through the Stamp Duty relief for first time buyers’ scheme. Through the scheme, first time buyers will pay no stamp duty on properties up to £300,000. For properties costing up to £500,000, there will be no Stamp Duty payable on the first £300,000.
If you’re to buy your first home, it’s always a good idea to talk to a professional advisor. At Hanne & Co, our market leading team of specialist lawyers can provide you with all the information you need. Find out more about our Residential Property & Conveyancing services by clicking here.