"Some have suggested that the Government plans to announce cutting stamp duty for first-time buyers, in the Autumn Budget, a step we would welcome."
Deposits remain the number one obstacle for over one in three (34%) first-time buyers, who aim to save an average of £34,397. In fact the average deposit needed is £49,639 according to the ONS – meaning many first-time buyers will be faced with a huge deposit deficit of 31% equating to £15,388.
When examining this trend across the regions, this disparity is particularly evident in London. First-time buyers looking to buy in the capital are aiming to save an average of £48,000 when in fact official figures show the average deposit is more than double at £123,000 which would leave them £75,000 short.
Prospective first-time buyers are also under estimating the amount of time it will take them to save for this deposit. Almost three fifths (58%) believe they will be able to reach this goal within five years while in reality just half (51%) of recent first-time buyers reached their goal in this time and actually over one in seven (16%) took over eight years to get there.
When it comes to the additional costs associated with buying a home such as solicitor’s fees and stamp duty, almost one in three (32%) prospective first buyers don’t know how much all of this costs. For those who have recently managed to get on the property ladder, two in five (40%) spent more than expected on these extra costs, by an average of £2,334.
First-time buyers also have to take into account the potential costs of a property purchase falling through. Almost half (47%) of first-time buyers who bought this year experienced the collapse of a property purchase, at a cost of £1,305.
Charles McDowell, Commercial Director, Mortgages, commented: “It is clear there is a divergence between perception and reality when it comes to the house buying process. This often means those looking to buy are under-estimating the associated costs as well as the time it could take to complete, especially with first-time buyers expecting it to take four years on average to save for a deposit.
“This lack of understanding clearly has financial implications but it can also take its toll emotionally. Our first-time Buyer Index carried out in the second quarter of 2017 revealed nearly one in five (17%) recent first-time buyers took three or more attempts to buy their home and the process of buying a first property caused so much stress over one in three (35%) were made ill.
“Some have suggested that the Government plans to announce cutting stamp duty for first-time buyers, in the Autumn Budget, a step we would welcome. As it stands, first-time buyers are systematically let down by an overly complex, opaque and costly system."
