Spring Property Survey: Advice for the new buyer: be careful, it's your first time

FIRST-TIME buyers are, in theory, the blue-bloods of the house-buying public. In practice, they are often bewildered by the abundance of mortgage products available to them and ultimately disappointed by the realities of the fine print.

But buyers who retain control of the house-buying process - by understanding in detail each step they take - can get access to a wide range of deals from lenders, developers, solicitors and valuers. First-time buyers are seen as the people who will lead Britain out of recession. With so many existing homeowners afflicted by problems of negative equity, first-time buyers are more important than ever to the property market.

Many developers and building societies are offering very attractive discounts and special offers to prospective buyers. Fairclough Homes, for example, is planning to sell 750 new homes in 1997 at 1993 prices. In the meantime the future buyers can rent the properties for a rental which is half the rate - 3.99 per cent - of what they would otherwise pay in mortgage payments. Although this offer is open to all buyers it is, in practice, restricted to people ready to move into a new house - firsttime buyers in most instances.

Wimpey Homes is paying a 5 per cent deposit on behalf of first-time buyers on certain of its developments in the south of England. It will often make a contribution towards legal costs and it is providing a free three-year mortgage payment protection plan. Other developers are offering similar benefits. Free cookers, freezers, carpets and curtains are quite commonly on offer.

The banks and building societies are offering a wide range of preferential rates for new homeowners. The Cheltenham & Gloucester Building Society has a three-year deal for first-time buyers. In the first year the rate is fixed at 4 per cent. After that the rate will be pegged to the society's prevailing variable rate. The Nationwide is offering a two-year 4.25 per cent fixed rate to the buyers of 1,500 properties from its repossessions book.

Some lenders are offering first-time buyer discounts on their variable rates. Others are focusing more on fixed rates. The Abbey National offers firsttime buyers a 6.25 per cent rate fixed for 18 months - 0.60 per cent below the rate available to other borrowers. Its three-year first-time buyers rate is pegged at 7.25 per cent, 0.25 per cent below the rate for other borrowers.

Some mortgage rates are dramatically discounted for firsttime buyers - but very shortlived. The Britannia's 3.99 per cent rate, for instance, lasts only six months. On this kind of deal, first-time buyers can find themselves losing out in the long term for what they gain in the first few months.

Solicitors and surveyors are also becoming increasingly competitive. Before the recession very few lawyers would quote a fixed price on conveyancing. Now fixed prices are widespread. Lawyers typically charge pounds 100 to pounds 150 for dealing with the purchase of properties under pounds 100,000. Even lawyers who do not quote a price beforehand are now expected by their professional body, the Law Society, to explain their means of charging beforehand.

Surveyors usually set their fees on a scale of charges which varies with the value of the property. Increasingly, however, they are becoming open to negotiation - particularly in areas where they are short of business.

First-time buyers can shop around themselves or take advice from mortgage providers, independent financial advisers or their own solicitors and accountants. But they need to be very careful whom they take advice from. Many lawyers, in particular, are very poorly informed about the financial services market. And, despite the supervisory regulations, many financial advisers do not give good long-term advice to their clients.

If they are careful, first-time buyers can do very nicely in the current property market. However, they are by definition inexperienced in property matters, and can lose out heavily if they do not understand every part of the house-buying process.