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Are First Time Buyers Suffering Because Of COVID-19?

house with a key for first time buyers

COVID-19 has changed the economic position of individuals and businesses significantly within the UK. First time buyers have not been spared from the financial impact of COVID-19, and this demographic has always come up against major challenges when attempting to get their first foot on the property ladder.

The most significant challenges for first time buyers are well known and include saving enough money for the deposit and earning a high enough salary to attain the necessary mortgage.

The Coronavirus pandemic and the job and wage insecurity it causes have put lenders in a position where they are increasingly cautious about lending, and in particular with first time buyers. 

According to a recent survey conducted by Trussle:

  • 65% of first time buyers say they feel it is impossible to get on the property ladder, with 62% deciding to delay their home-buying efforts and save for a further year.

 

An Increasingly Confusing Housing Market

The changing lending criteria and deposit requirements are leaving the first time buyer confused, also evidenced in the Trussle survey:

  • 76% of first time buyers in the UK say they feel confused, angered, and worried about how COVID-19 has affected their home ownership prospects.

The number of lending products for first time buyers is down. There are now fewer high Loan To Value (LTV) mortgages, and fewer than 4% of mortgage deals with an LTV of over 90%, compared to this time last year.

It is not all bad news because other financial support for first time buyers remains in place. The Help to Buy, Right to Buy/Acquire, and Shared Ownership Schemes are three examples of the financial support available. Furthermore, Chancellor Rishi Sunak once again extended the Stamp Duty Holiday (originally planned to end on March 31st, 2021). The Stamp Duty Holiday will now come to an end in June 2021, with a tapering off period that will run to the end of September and will save home buyers up to £15,000.

However, first time buyers may still need to look further afield in more affordable areas and consider if working from home is a viable long-term option for them before making a purchasing decision.

 

Post COVID Outlook

While property viewings, valuations, and sales continued through the latest bout of lockdown measures, the housing market’s recovery can only be achieved by including the buying power of the first time home buyer.

Property availability continues to be an issue. COVID-19 is adding three to eight months to new residential development build times, delaying the completion of 250,000 homes. However, residential development finance is helping property developers acquire financing and complete projects, which will ultimately improve availability.

For more information on the help available for first time buyers and residential property developers, please contact the BLG team.

WHAT OUR CUSTOMERS SAY ABOUT US

"A challenging site like no other with every inch of the plot being built on and 12 apartments built-out through a driveway 2.5m wide off of a main high street with limited access rights, not to mention all the complexities associated with 13 Party Wall Agreements. Most lenders would not have had the vision for the scheme or the confidence in Spiller Builders to build out the scheme.  I just wanted to say how helpful the entire BLG team have been during the build. A very approachable and knowledgeable team, with a “can do” approach to lending. We will be looking to do more business with you for sure."

“We have used BLG for development finance for over 8 years. During that time we have found their knowledge and expertise in the property development industry to be second to none. Their loan process, pragmatic and flexible approach to lending and flexibility when required has supported our business needs throughout the period and provided us with support to deliver new homes in Bristol and the surrounding areas.”

“As property developers you never know the curve balls that you may get and a project that is great on paper may prove a bit more tricky.  This happened to us on a project that BLG have funded and throughout they have supported us.  Our business likes to be collaborative and when we hit those tough moments it really felt like we were working as a team with BLG.  If you have a decent project you can get it funded, but what you really need is a business that is there to support and advise you as well.  For us on this project it was BLG.”

“I approached BLG Development finance with an opportunity I had in Chesham, Buckinghamshire, to build 5 new build houses in 2021. My main contact was Anil Bains who is a Director covering Asset Management. Within very quick timescales, BLG provided me with indicative quotes in regards the finance levels they could offer me. Having considered those levels, I requested a valuation to be carried out which again was dealt with swiftly. We proceeded to completion. The build went very smoothly with monthly monitoring being carried out by BLG and monthly drawdown requests dealt with in a very timely manner. Due to a difficult time generally in the market in regards selling, I was in need of a six-month extension to the loan which again was appraised very quickly and granted. Having dealt with numerous funders over the last 20 years, I can only speak highly of my personal experience with BLG and would very confidently work with them again on any future projects. “

"From our side it has also been a pleasure working with BLG and the team there. We have found you easy to deal with, proactive in resolving any minor issues that have arisen through the project and shown great flexibility in working with us as a partner. We will certainly like to work with you on future partners."

“I really appreciate your hard work. We really like the way you communicate & I must say I haven't seen many people who are that approachable.”

“A very efficient processing team, dealing with the DD once deal credit approved, through to completion”

“Many thanks for your efforts on this one and getting it approved and sorted so swiftly, very much appreciated. I am sure I will be speaking to your over the coming months.”

“We had other funding options, but chose to use BLG again, as we work well with the team, who always provide very clear information and advice with a friendly approach throughout the funding process. Very efficient and always very helpful.”

“Many thanks Anil, it’s been a real pleasure working with BLG so far.  We’re lining up the next project too”

“We would recommend all staff we have dealt with at BLG, as we are very satisfied with the team and the initial offer/terms presented, then you and the funding team, through to the draw down team at valuation stage.”

“All documents are clear and the way you keep clients informed, all the way along the funding process, is refreshing for us”

“With regard to what should be improved at BLG, we work with many lenders in our business and we do not get the help and response we have had on the two projects with all at BLG on our funding for our developments.”

“We would particularly mention Dave Edwards and Tom Pitts as being central to having a smooth working relationship and being positive and helpful at all times. Their guidance in helping us navigate the project from inception to completion was invaluable. As was their patience, particularly at the beginning. We look forward to many future projects with the BLG team.”

“We would like to express our appreciation for your support on our development in Bristol. We were very pleased that, from the outset, you shared our vision of the project to convert a dated but classical building, that had outlived its usefulness as a school, into unique luxury apartments with views overlooking the city. We found our dealings practical and streamlined. Monthly payments were processed in an efficient and timely manner.”

“BLG are very good at communicating with clients and all documents are very clear and all at BLG are always happy to help.”

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