Buying your first home is an exciting time. However, with thousands of properties to choose from, how do you go about making the right decision for you and your family?
If your parents are contributing to the purchase, then this can add an additional layer of complexity. It’s estimated that 60% of first-time buyers receive help from the Bank of Mum and Dad, but with this help sometimes comes an expectation as to the sort of property you ought to be buying.
In our guide we look at how parental gifts can throw up challenges, and we share loads of great tips to help you find the right home first time. Keep reading to find out more.
Parental gifts can throw up a range of challenges
As a first-time buyer, buying a property – particularly in London – can be tough. So, it’s perhaps no surprise that more and more parents are either lending money to their children or gifting them part or all of the purchase price.
If you’re committing a large portion of your savings/income to a purchase, it’s important that you make the right decision. If your parents are contributing funds also, it can make the choice doubly difficult.
Property search expert Sara Ransom says that she is increasingly being asked to help children find properties by parents who are gifting money towards the purchase. She says: “The danger for a buyer who feels no financial pain is that their decisions may be less considered.
“We have helped two such families in the recent past. The parents wanted their children to conduct the search, with our professional advice, and to understand all the ramifications of the investment and the property choice.
“We helped the children prepare something akin to a business plan, justifying the kind of property, the location, and demonstrating that they realise the long-term value of the gift,” she adds.
Essential first-time buyer property search tips
When looking for your first home, it’s important that you carefully consider the requirements you have for your home.
Sara says that first-time buyers must understand that the right property needs ‘to meet many requirements, not just a cool apartment in a hip location that looks exciting right now. Understanding that a property purchase should be a long-term decision is vital.’
She adds: “Buyers should also make sure the property they choose is relevant to the area, for both resale and rental purposes. Life plans can change so dramatically at an early age that it makes sense to buy a property that will perform well in the rental market.”
Other tips that will help you with your property search include:
- Don’t feel compelled to spend every penny of your budget. If your parents are gifting you some money, you don’t have to spend it all. If you find the perfect property and it comes in under budget, don’t immediately rule it out.
- Think long term. Is the property going to be suitable for you in years to come? Is it big enough for a couple and, in later years, children? A one-bedroom property could limit your options in the future.
- Don’t forget that you’re buying a home, not an investment. While you may be interested in the potential capital growth of your property in the medium term, you must live there. Your decision should be based on viewing a property as your home, not as an asset.
- Think about the rental potential for the property. Your circumstances can change, and you may need to rent out your home in the future.
- Think about how suitable the property will be if your circumstances change. For example, it may be near to your current place of work but if your job situation changes, are the transport links good enough for you to travel elsewhere?
- Understand all your choices. Don’t immediately rule out a flat or a leasehold property just because you don’t understand the concept. These properties can be excellent purchases if you know what you are getting in to.
- Make sure you take a good look at the local area. Walk around the area in the evening as you’ll get a good idea of how safe the area is, how noisy the streets are and what sort of people live locally.
As a first-time buyer you may also not be familiar with all the financial responsibilities that come with owning your own home.
Sara advises: “Make a good assessment of the financial obligations in terms of outgoings and maintenance – service charges, council tax, utility bills, repairs etc.”
Additional advice for first-time buyers in London
One of the toughest places for first-time buyers to find the right property is in London. Young buyers are often tempted by interesting locations and up-and-coming areas, but these trendy spots may not be the right choice in the medium-term when jobs change, and children arrive.
Sara says: “The possibilities are endless. Shoreditch, Borough and Brixton come up time and time again as the area of choice for a young buyer, but long term, these locations are far from ideal.
“Young singles quickly become young families with young children, and these areas don’t tend to have a supply of family homes and aren’t very child-friendly. (There’s a distinct lack of parks and soft play areas!).”
So, if you’re a first-time buyer looking in London, where should you consider?
“We would urge younger buyers to look at areas like Brook Green, Brackenbury Village, Clapham South, Islington, Battersea or Putney, to name a few,” Sara adds.
“These are safe areas that have transferrable qualities for graduates to young families. Where family members live outside London, it always makes sense to look at an area that corresponds geographically.”