Aldermore bank’s latest First Time Buyer Index1, a survey of 1,000 prospective and 300 actual first time buyers reveals that, while many people are now more motivated to get on the housing ladder after lockdown, first time buyers have incurred significant costs from house purchases falling through, alongside the rising additional costs involved with buying a home.
Half (49%) of first time buyers have previously started the process of buying a house, only for it to fall through, with 50% stating this was due to lockdown. For first time buyers, the average cost of a house purchase falling though is £2,912, resulting in a total2 loss of £406,641,036 in the twelve-month period April 2020-March 2021. Prospective first time buyers also say they have needed to delay their home buying plans by an average of 8.4 months due to the Covid-19 outbreak.
Lockdown and social distancing measures leading to delays has meant rising costs throughout the home buying process, which really add up. First time buyers say the most costly expenses incurred include solicitor fees (£1,229), mortgage fees (£1,086) and conveyancing/valuation fees (£1,020). Other costs include rent paid due to delays in moving in (£989), estate agent fees (£988) and moving fees (£910).
Overall, first time buyers that bought between March 2020 and March 2021 say they have experienced on average two months in delays and incurred an extra £5,870 in costs due to Covid-19. Over two-thirds (70%) say they spent more money than intended on their house purchase. These additional costs set first time buyers back a total of £1.67bn between April 2020-March 2021.
| Additional costs of buying a home | Per average FTB March 2021 | Overall market twelve months after Covid-19 |
| Solicitor fees | £1,229 | £350m |
| Mortgage fees | £1,086 | £309m |
| Conveyancing fees/valuation | £1,020 | £308m |
| Moving fees i.e. van hire, moving company hire | £910 | £259m |
| Rent paid due to delays in moving into your home | £989 | £282m |
| Estate agent fees | £988 | £281m |
| Other | £1,047 | £298m |
Despite setbacks and delays, prospective first time buyers are determined to realise their homebuying goals, with over four in five (85%) saying that owning a home is an important life goal. Over three in five (63%) first time buyers are more motivated to buy, but the type of home they are looking to buy has radically changed since the start of the pandemic. Two in three (67%) say they are reconsidering the type of property they want to purchase due to Covid-19. Outdoor space is widely valued, with two in three (66%) prioritising having a garden or balcony or being near the countryside or parks (63%). Furthermore, new buyers (62%) say proximity to loved ones is an important consideration. As working patterns likely shift towards remote and flexible working even after the pandemic is over, having home office space (63%) and good wi-fi connection (67%) are also more of a priority.
Jon Cooper, head of mortgage distribution at Aldermore said:
“The Covid-19 pandemic has motivated a great number of people to buy their first home. It is important, alongside raising a deposit, to identify and factor in any additional costs, such as solicitor, valuation and estate agent fees, as well as moving costs, all of which can add up. Seeking advice from a financial adviser or broker will help greatly in making the process less confusing. Although buying a house has its challenges, the reward can be great, illustrated by the large number of first time buyers (84%) who said the stress was worth it and that becoming a home owner has been extremely rewarding.
“Successive lockdowns over the past year have made us all re-evaluate how we live our lives, and what we need from our homes. It is no longer just a place to live, but a place of work, and where we exercise, educate our kids, and socialise. As a result, the data shows a dramatic change in preference in the types of properties new buyers are looking for.”
**Ends**
1 Research conducted by Opinium in March 2021, with a nationally representative sample size of 1,003 Prospective First-Time Buyers and 300 actual first time buyers, that purchased a home between March 2020 and March 2021.
2 The average costs incurred by first time buyers was applied to the total number of first time buyers (284,860) according to UK Finance (RL1 data table), for the twelve month period April 2020-March 2021