Getting on the ladder is hard, but the next rung can be as steep
Sunday 14 May 2006
Not all first-timers are buyers.
For those already on the ladder and looking to trade up, life can be just as tough as a first- time seller, according to new research from mortgage provider First Active .
Among people in this category, more than four in five suffer soaring mortgage repayments when they reach the next rung - with a third having to spend an additional £200 each month.
And that's before fees and higher taxes, warns Melanie Bien of broker Savills Private Finance. "Trading up for the first time can be an expensive business."
As most will move to a bigger property, they may also be jumping up a price band and over a stamp-duty threshold. If you buy a home costing more than £250,000, you will have to pay 3 per cent of the purchase price (at least £7,500) in duty- instead of the 1 per cent many pay for their first home (a minimum of £1,250).
The mortgage valuation fee charged as part of a home move is also calculated according to the price of the property, so this is likely to be higher - as are solicitors' fees.
Some 15 per cent of the people surveyed by First Active also report that the transition to dealing with buyers as well as vendors is the most stressful aspect of being a first-time seller.
"Your main bargaining point - that you were chain-free - no longer applies," adds Ms Bien.
And you now have the added stress of trying to time the sale of your existing property with the purchase of a new one.
"You can try to synchronise completing on both at the same time, but only a few lucky people manage this," says Nick Gardner of broker Chase de Vere Mortgage Management.
"Many end up staying with friends or family - or even renting for a short period until the owners of the property they are buying are ready to move."
It often makes more sense, he adds, to find a buyer for your property before searching for a new home. "This puts you in a stronger bargaining position as a house-hunter, because most vendors won't take you seriously if you are selling but have not yet received an offer."
The National Association of Estate Agents (NAEA) warns that struggling first-time sellers will also be the ones who suffer most from the introduction next June of Home Information Packs (HIP), under which vendors pay for all the survey information.
In an NAEA survey, three- quarters of first-time sellers reported that the estimated costs of compiling HIPs - between £600 and £1,000 - would discourage them from putting their homes on the market. This is because the HIP fee will have to be paid whether the property is sold or not.
"Costs like these mean many may find the next step up the ladder too much of a stretch," says NAEA's chief executive, Peter Bolton King. "This will affect the rest of the housing market, slowing it right down and causing frustration for first- time buyers and those further up the ladder alike."
Hazel and David Lambert bought their first home in Basildon, Essex, just over a year ago. At the time, they had just had a baby and were looking to trade up to a family house within 12 months. "We plan to have more children and want to move into a bigger place - with four bedrooms and lots of space," says Hazel.
For work reasons, they hope to relocate to Reading - "We know property is expensive and will mean a jump in our monthly repayments - and we are worried about being part of a chain."You always hear about people being gazumped - it sounds problematic," adds Hazel. "We'll think very carefully about the timing."
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