The private rental sector is likely to benefit as a result of first time buyers’ lack of understanding of the timings, processes and costs of purchasing a property.
Just over a third say it is still an obstacle to save for a deposit; the research, for the Aldermore mortgage company, shows prospective buyers are falling short in their estimations of how much they need for their first deposit.
The study shows that most aim to save an average of £34,3972 when in fact the average deposit needed is £49,639.
When examining this trend across the regions, this disparity is particularly evident in London. First time buyers looking to buy in the capital are aiming to save an average of £48,000 when in fact official figures show the average deposit is more than double at £123,000.
Prospective first time buyers are also under estimating the amount of time it will take them to save for this deposit. Almost three fifths believe they will be able to reach this goal within five years while in reality just half of recent first time buyers reached their goal in this time and actually over one in seven took over eight years to get there.
When it comes to all the additional costs associated with buying a home, extras such as solicitors’ fees and stamp duty, almost one in three prospective first buyers don’t know how much this costs.
For those who have recently managed to get on the property ladder, two in five spent more than expected on these extra costs, by an average £2,334.
Some 47 per cent of first time buyers who bought this year experienced the collapse of a property purchase, at a cost of £1,305. Over a quarter of those who bought over the last three years have also experienced this, evidencing just how exposed first time buyers are within the current housing environment.
“Some have suggested that the government plans to announce cutting stamp duty for first time buyers in the Autumn Budget, a step we would welcome. As it stands, first time buyers are systematically let down by an overly complex, opaque and costly system” says Charles McDowell, Aldermore’s mortgages commercial director.