As the dust settles after the dramatic results of the election and we head towards a Queen’s Speech before Christmas and a Budget announcement in February, we review what the General Election results may mean for First Time Buyers.
For many people considering their first step onto the property ladder, the desire to buy may have stalled due to the delays surrounding Brexit. With a more definitive end in sight now, we’re likely to see a jump in the number of transactions as we creep closer to leaving the European Union, but what does this mean for First Time Buyers?
What do the results mean?
The pre-election manifesto presented by the Conservatives emphasised the importance of helping First Time Buyers. This group is likely to be a key driver in the growth of the property market, but many First Time Buyers will need assistance to help with their property purchase. The Conservative government has outlined plans to extend the use of Help to Buy to 2021, but by 2023 the scheme will be brought to an end.
This means that individuals who have delayed their plans to purchase a new property using the scheme need to act quickly to avoid missing out. Although the government claims there will be a replacement for Help to Buy in 2023, we are yet to see any details of a new scheme to help people purchase a home.
During 2019 at Haslams, a Help to Buy: Equity loan was used in over 65% of eligible new home sales. Most of the homes within our active developments can be purchased using this scheme, giving buyers a huge amount of choice, and many purchasers have been surprised how affordable buying a new home is compared to the cost of renting.
Property prices in and around the Reading area can vary greatly depending on the proximity to the town centre, good schools and transport links, but current new homes developments in Reading have an average entry price of £253,000 for apartments.
This means that, when purchasing an apartment with a 5% deposit of £12,650 and a 20% equity loan value of £50,600, the mortgage requirement is just £189,750. Using these average figures we can assume an approximate repayment of £852 per month; based on a 30 year mortgage term with 3.5% interest.
The average monthly rent for an apartment in Reading is currently £1,002, meaning buying could be considerably more affordable than renting. When considering that new build properties are also cheaper to heat and are generally more energy efficient, the prospect of buying a property is very appealing.
The property ladder
In addition to funding a deposit, the reality of paying Stamp Duty can also be a barrier to purchasing a home. The good news for First Time Buyers in Reading is that, under the Conservative government, we’re unlikely to see any increases in the land tax, as it was not mentioned in the manifesto.
Providing there are no changes, this will mean that up to the value of £300,000 outside of London, there will continue to be no Stamp Duty for First Time Buyers.
With rents continuing to rise in Reading, and the likelihood that property prices will start to increase over the coming year after stabilising during the recent political uncertainty, it could be concluded that now is the perfect time to take that first step onto the property ladder. Take advantage of the availability of the Help to Buy scheme and the Stamp Duty exemption to secure one of these brand new homes currently on the market:
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