Your first time? Don't be nervous, just be careful

Buying your first home rates high on the stress scale, and the booming market means you may have to pay more for less.
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Among the major causes of stress, it is often said, are bereavement, divorce and moving house. What seems less certain in the medical context is whether moving house means being evicted or dispossessed, selling or buying or being caught in a chain. Where on the scale of rising panic is any of these supposed to register? Or - to focus on the point here at issue - is buying for the first time any more or less nerve-fraying than for the second or third?

Although first-time buyers probably vary as much as any others in age, shape and economic circumstances, and can cover the spectrum from scrimping young marrieds to cynical beneficiaries of generous court settlements, it would seem a good idea to get some definitions clear from the start and find out if you qualify.

Not for nothing does the Law Society append a "glossary of terms" to its information leaflet "Buying a house? Your solicitor can help" - although "first-time buyer" (FTB), like "conveyancing", "gazumping" or "mortgage", is not one of the terms it cares to commit itself to defining. So, bring on the builders.

"First-time buyers," says a spokesman for Barratt Homes, which last year persuaded them to buy a third of the 8,000 or so flats and houses it sold on its developments up and down the country, "are people who have not bought a house before".

Quite so - but it doesn't tell the full story. "We generally sell houses to second-time buyers," says Steven Carey, managing director of Fairview Homes, with development sites mainly within the M25, in Essex and London Docklands. But 75 per cent of the 2,000 properties - mostly studios and flats - his company completes and sells each year go "as 'starter' homes to true first-time buyers, as opposed to split-ups and divorcees", he adds.

This distinction may seem a little unfair. But as developers are keener on selling what they've developed than on playing detective to pigeon- hole prospective buyers more precisely, it should not in practice make any more than a statistical difference.

Statistics from the Council of Mortgage Lenders (CML) show that FTBs accounted for one-third of the estimated total gross advances the council's members made last year, the other two-thirds going to "former owner-occupiers". More than two-thirds of the loans to FTBs were for sums between pounds 30,000 and pounds 80,000, the average advance being pounds 44,000, averaging 90 per cent of purchase price. The average gross mortgage rate was 6.72 per cent, with average annual payments of pounds 2,645 net of interest relief.

The FTB's average income was pounds 19,723 - up pounds 1,000 on 1995, but still well below the figure for all buyers, who earned pounds 25,000 on average and who bought properties priced at just over pounds 70,000 on average.

The total number of residential property transactions in which its members are involved could reach 1.45 million this year, says the CML's Michael Coogan - still far short of the 2 million a year at the height of the late 1980s boom. After the raft of planned demutualisations, 75 per cent of the loans will have been advanced by banks and a mere 21 per cent by the remaining building societies.

Mr Coogan won't hazard a guess on how may of these will go to FTBs. But he says: "We've been doing some background research which suggests that, due to a combination of factors, people are coming into the housing market slightly later." These factors he identifies as: a response to fears of negative equity and recession; the need for a deposit and the time needed to save it; and the question of student debt. This last has been reinforced by the Dearing Report and the likelihood that contributions will soon have to be made towards tuition fees.

Mr Coogan believes these factors will lead more people to delay their decision to enter the housing market until their late 20s. When they do decide to enter, the CML has just the leaflet: "You and your mortgage lender - The Mortgage Code", a sort of Ten Commandments as if handed down from the good old, solidly mutual Mount Sinai. Its 10 key commitments include pledges such as "to act fairly and reasonably in all dealings with you" and "to help you choose a mortgage to fit your needs" and "handle complaints speedily", and so on.

He advises that FTBs should not just "jump in", but should take care to choose the sort of mortgage which suits them best. They should work out exactly what they can afford now and, especially if interest rates rise, in future. As the market is vibrant and prices are rising, they should settle the finance first so they can move swiftly.

FTBs should also remember that although the Property Misdescriptions Act has made it harder for estate agents to write inaccurate particulars, the onus remains on buyers to get their surveyors and solicitors to ask the right questions.

The National Association of Estate Agents rightly warns in its 1997 leaflet for FTBs that "setting foot on the first rung of the housing market ladder is an important step" and should be treated with utmost seriousness. For FTBs, the NAEA chief executive, Hugh Dunsmore-Hardy, has the following advice: "Buy with your eyes and not with your heart, and look at the house you're thinking of buying as if you're going to sell it.

"The majority of first-time buyers stay in their first home for between three and four years, so it's important to think about the area in which it is located and the type and condition of the property," he adds.

So, when viewing, always check on the things that could prove costly to repair or replace , like windows, roof, electrics and cracks in walls.

Or, of course, you can play safe - in theory, at least - by going for a newly built home. Buying a new flat on lease also spares you the sort of well-publicised risks associated with some older blocks of mansion flats. On a Fairview development in Essex, you can buy a studio flat for as little as pounds 25,000. Although the strength of the market means that deals and incentives have been reduced, you might still get "5 per cent assistance" with your deposit.

If you go for a Barratt, you might be able to pay just pounds 99 down and move in under a scheme which allows you to live rent- and mortgage-free for an agreed period while you save the money for your deposit. Or, if you go for a Wimpey, you might still be able to benefit from cheap carpets and curtains, or white goods, or gain pounds 500 towards the cost of moving.

A Wimpey spokesperson says: "Until recently people did seem to be renting more or staying at home, and buying later. While the market was down, this meant they could also buy bigger, two-bed instead of single-bedroom homes. But now confidence is coming back and prices are going up, so of course the same money will buy less."

Some things, it seems, never change - not even for the nervous first- time buyer.