How to get on the Property Ladder. A NetLocation Event
On Thursday, July 4, 2013 we joined a panel of experts in Central London to talk at How To Get Onto The Property Ladder, an event organised by The Net Location. Here's the rundown.
It was telling that the event was so well attended, with around 90 young professionals looking for advice on how to buy their first home.
The event was chaired by Homeowners Alliance CEO, Paula Higgins, who was joined by our very own Angela Kerr.
Paula and Angela started by explaining that research shows most people want to own a home – despite popular opinion – and outlining some of the difficulties Homeowners Alliance aims to help first time buyers avoid.
Homeowners Alliance has established that saving for a deposit was a big concern among people looking for a home, Paula said. And Angela pointed to our YouGov survey which found that only 20% of homebuyers trust estate agents.
Looking for a home is like having a second job, Angela said. “It’s not something you can just do for a few hours a week,” she added.
She advised first time buyers to develop a relationship with their estate agent. “Property porn on your Ipad in the middle of the week is fine, but go to an estate agent with a list of everything you want,” she said.
But avoid telling the estate agent anything about your financial situation because it could give them ideas about how to squeeze more money out of you, she added.
Housing Market Statistics
Eleanor Bosley, senior manager at KPMG, analysed some of the data surrounding house prices. “The papers know that house price scare mongering sells,” she said, and advised us all to take headlines with a pinch of salt.
She told the room not to worry about the short term fluctuations of the UK’s housing market. “If you hold onto your home, they won’t matter so much,” she said.
Eleanor ended by pointing out that a shortage of new housing was driving up UK property prices. Paula agreed but pointed out that the UK has had a housing shortage for 20 years. “Nothing’s going to change any time soon,” she added.
The floor was then taken by Frederick Kay, senior mortgage broker at John Charcol. He said the mortgage broker’s job was to ascertain what the buyer wants and how their needs can be met.
His tips on how to make sure you are eligible for a mortgage included getting on the electoral register. He also said people in the professions were more likely to get a generous mortgage.
“It might seem like discrimination but that’s just the way it is,” he said.
Frederick advised the room to sort out any adverse credit before looking for a mortgage. “There are exceptions – If you have a £20 debt with your mobile phone company, we can probably deal with it,” he said.
Buying with help from The Bank of Mum and Dad is the norm now, he said. “In the last four years, I’ve only had one first time buyer who bought with their own cash,” he added.
He also advised people to be careful when buying with partners. “I see three to four divorce cases a month – and they’re not amicable,” he said.
Shared Ownership options
The floor was then taken by Jim Munson, head of marketing and customer care at Metropolitan, which is the company behind Homematch, the shared ownership scheme.
Jim said the British were natural homeowners. “Generation rent doesn’t want to be generation rent. 84% of people want to buy their homes – we’re not like Germany,” he said.
The average household income in London is around £26,000 a year but Jim said Homematch had recently helped a family with a household income of £14,000 enter into a shared ownership scheme.
“Saving for a deposit is still an issue but it’s a lot less than paying 10% of the market value,” he added.
He said it was possible to “staircase” a shared ownership contract, which means increasing your share in return for a larger mortgage. He also said it was possible to downwards staircase. “This is not widely publicised so it’s worth asking,” he said.
Working with Estate Agents
The final speaker was Jamaal Robinson-Matthews, senior negotiator at King’s Group estate agents. Jamal jokingly asked if anyone in the room actually liked estate agents (to which Homeowners Alliance’s Paula and Angela raised their hands!).
“We’re here to help but we’re here to sell too. So if you can’t afford to buy we can’t help” he said.
He also advised developing a relationship with your estate agent. “Build a rapport and put a face to a name. We know what’s happening on the ground and not just what’s in the papers,” he said.
Then it went to the floor to ask questions.
The first was put to Jim, who was asked if he had any predictions about house price inflation in London.
He said it was hardtop predict what would happen in the future but encouraged the room not to despair. “If you had a heat map of London house prices, of course you’d see hotspots but even now there are parts that are amber,” he said.
The panel was asked what the planned changes to Help to Buy in January would mean for the market. To which they replied that, as much as they’d all like to try and guess, we’ll have to wait for the Autumn Statement to find out.
Up and coming areas are an obvious investment prospect in London and the audience wanted to know how to spot one. The panel said an even more important factor to consider was whether or not you could live in the property yourself.
Jim said: “If the market forces you to, could you stay there for the rest of your life?”
Paula added: “Go there at night, get on your bike and ride around, look at local websites to get a feel for the area.”
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