Perhaps one of the most surprising products of lockdown life in the UK is the amount of people set to come out of the pandemic in a much-improved financial situation. Initially a huge concern in light of uncertainty around long-term job security and the furlough scheme, no one would have predicted the financial stability an extended lockdown has provided for those who remained in work.
With nothing to spend their hard-earned cash on, many people sit today with bolstered savings accounts and an increased sense of financial mobility. As such, the collective appetite for more serious life purchases has grown, not least in the housing market.
There is no bigger purchase in life than a house, and as such it’s essential you do what you can to get maximum value from your purchase. Getting a good deal on a house boils down to a few key areas, so what should you have in mind as a first-time buyer or mover?
With house prices and demand constantly in a state of flux, timing is everything when it comes to your home purchase. Naturally from that, the big question is: is now a good time to buy a house? Frustratingly, the answer is: yes and no.
Coming out of lockdown, house demand is unsurprisingly high as people look to utilise their additional savings and a number of highly useful buying assistance schemes from the government. However, with that clamour to buy comes a few perils, best summarised in a few bullet points.
Reasons to buy right now:
- Spring is typically a good time to buy a house, with more properties available on the market as sellers look to tie up deals before summer.
- The government’s 95% mortgage scheme has made buying more accessible for first-time buyers, who will only need to save up a 5% mortgage to buy a new property rather than the typical 10%.
- The government’s stamp duty holiday, removing all stamp duty from properties up to the value of £500,000, has been extended to 30th June 2021 – with partial savings set to continue for a while after that date.
- Property prices are set to rise even further, as pent up, post-lockdown demand drives a surge. Thus, if you want or need to buy in the very near future, now is better than later.
Reasons not to buy right now:
- The increased demand from would-be buyers has caused an unexpected surge in house pricing to date, with the average house prices up as high as £250,000 last November (despite predicted falls) and another peak in February 2021 at £230,000 – a 6.9% increase on the year.
- What goes up must eventually come down, and though prices are set to continue to rise through summer, a fall will eventually come, leaving peak-time buyers in a bum deal scenario on their mortgages.
Buying a home has some principles in common with buying a car – not least proceeding with an air of caution. When you go to buy a used car, you do a thorough check of the vehicle and ask about its history. The same should be done with a house, just in an awful lot more detail.
There are a huge number of checks to make before completing a house purchase. You can find a detailed list here, but your overall approach should come down to:
- Doing your homework on the property, its history and the surrounding area.
- A check of the neighbourhood.
- A critical look into the condition of the property.
- An understanding of the seller and why they’re moving.
- Getting all the additional information you can from the estate agent.
Ah, the art of negotiation. Perhaps a dying practice in modern life but certainly not in house buying, where even a 1% discount can mean thousands in savings. The effectiveness of negotiation comes down to supply and demand, so bearing in mind the current market, you may not be in the best position to knock someone down on price. Generally speaking, however, there are a few ways to go about securing a better deal:
- Get your finances in order before making an offer. Offers that don’t have a mortgage preapproval behind them don’t carry any weight. So, if you’re struggling with bad credit or are yet to check your mortgage status, make sure you’ve taken the necessary steps to give yourself financial credibility before talking numbers.
- Base your offer on the property on the home’s value rather than the list price. If you’ve done your research, you’ll know the right sort of property value for the area and what your chosen property should command. From there, you can make a judgement on whether the list price is a bargain, a rip off or about right, and attack as you see fit.
- Move fast on a property you like. Especially in a high-demand market, getting your offer in early could be the difference between securing the property and not.
- If you don’t ask, you don’t get. As long as you’re not in another dimension price wise, there’s no harm in making an offer on a higher value property that sticks within your budget. The worst that happens is you get a big fat no.
- Expect to compromise. A lot of sellers don’t get the list price they wanted for a home, but virtually no buyers get their opening offer accepted either. Be prepared to meet in the middle on a deal you’re both happy with.
Buying a house is an awfully big deal, so treat it as such. Do your research, understand what the right time is for you to make a move and make sure you approach any purchase with a critical and financially sound approach. In the post-lockdown market, your efforts could be worth tens of thousands of pounds.