Achieving the First Rung on the Property Ladder
The difficulties faced by first-time buyers in getting on the property market have been well documented, but new research has revealed that some young adults are now taking a less traditional route to achieve that important first rung on the ladder.
Buying With a Stranger
The study, by HSBC, found that 14% of young adults in Britain would buy a home with a stranger in a bid to buy their first home.
According to the report, 80% would co-own a property with someone who is not their partner, with a further 59% saying they’re at least “open to the idea” of buying with a stranger – if they ticked all the right boxes.
Interestingly, 4% said they would be prepared to move in with “someone they met in the pub”, while just under one in twenty would even consider buying with an ex.
As part of the study, respondents were asked to list their top criteria for their ideal buying partner from a personal and financial point of view.
On a personal level, the ideal person would be:
- good at DIY (39%)
- love pets (37%)
- enjoy a good BBC drama (19%)
- be able to cook a roast (18%)
- and (in an ideal world) not a vegetarian or vegan (24%)
The all-important financial criteria are:
- paying the bills on time (80%)
- having a good credit rating (31%)
- having monthly savings targets (19%)
- and earning over £50,000 a year (18%)
“Buying a home is a life-changing financial commitment and there’s no doubt this is an unorthodox way of doing it,” said HSBC’s Chris Pearson. “People who are considering this step need to not only find someone responsible and compatible – they also need to dot every “I” and cross every “T” to avoid a difficult situation in the future, especially when it comes to selling. It’s important to have a clear agreement in place from day one so you both know what's expected of you.”
When asked why they’d buy a property with someone other than their partner, 33% of Brits said it is because they simply can’t save up enough money for a deposit on their own.
Twenty-seven per cent said their annual salary would not get them a big enough mortgage to buy a property where they would like to live, while 25% said it would be nice to split the bills with someone else and 9% said they will rent out a room to help with the mortgage.
First-time Buyer Mortgage Lending
Despite all the difficulties however, first-time buyers are still managing to find their way onto the market. The latest mortgage trends update from UK Finance revealed that in 2017 overall the highest number of first-time buyers (365,000) since 2006 took out a mortgage.
However, on a month by month basis, there was a 5.2% fall in the number of first-time buyer mortgages completed in December 2017 compared to the same month a year earlier.
The data also revealed that the average first-time buyer is 30 and has an income of £41,000.