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21 April 2020, 16:19 | Updated: 21 April 2020, 16:30
House-buying has been put on hold since the UK went into lockdown, halting first-time buyers in getting on the property ladder. Here's what you need to know for when you continue your house-hunt...
The latest news on the coronavirus pandemic’s affect on the housing market is the outbreak will halt a total of 520,000 house sales in 2020.
The government ordered a temporary freeze on the housing market last month due to COVID-19, as the entire nation went into lockdown.
Property consultancy Knight Frank told The Guardian the drop in house sales would have an effect across the property industry but, assuming restrictions will be gradually lifted in June, the market downturn could result in 150,000 fewer mortgages for first-time buyers.
So, what does the next few months look like for first-time buyers? We spoke to some experts for advice on what to expect.
Operations Director at Property law specialists Quittance Legal Services Chris Salmon assured that although it may be harder to obtain a mortgage when lockdown measures are eased and things begin to return to some sort of normality, you may be able to get a reduced price on a home.
Chris explained: “Asking prices will not significantly fall, but due to the economic downturn caused by coronavirus, there will be homeowners who are desperate to sell. This means that you may be able to get a reduced price on a home if you are willing to bid 15-20 per cent below the asking price. First-time buyers may not necessarily be savvy to this, but it could be the difference between getting on the property ladder or not.”
Meanwhile, Know Your Money’s co-founder John Ellmore advised it's too early to tell if house prices will be much cheaper.
He explained: "However, if we look at house prices historically, they tend to go down when the economy shrinks. The latest figures from Rightmove support this, and the average property coming to market has dipped by 0.2 per cent vs an average increase of 2.4 per cent in April 2019.
"Rightmove suggests being cautious about these figures as they’re not 'meaningful' as we don’t currently have a functioning housing market, and the majority of house sales are on hold.
"To get a clear view on the long-term impact to house prices we need to wait and see what the real economic impacts of COVID-19 are post lockdown."
“It will be harder for first time buyers to get mortgages than a few months ago,” Chris warned. “Many lenders are not taking on new applications until there is greater economic certainty, but buyers (including first time buyers) seen as lower risk borrowers should still be able to obtain a mortgage. If your loan to value ratio is under 70 per cent then you still stand a good chance of getting accepted.”
“Again, it will be harder to get a mortgage than before lockdown. For the next six months first time buyers will unlikely be able to get a mortgage where the loan to value ratio is above 90 per cent. Any ratio under 70 per cent will still be possible to obtain.”
Chris advised: “I would recommend starting as soon as possible. There will be a bounce back from the lack of demand over lock down, which will push prices up.
There will also be a backlog of requests for conveyancing and insurance services, which will slow down the buying process, this can be reduced by starting these processes now.”
The government’s help to buy scheme is also set to be extended according to Nick Sherratt, MD and Co-Founder of online mortgage broker, Mojo Mortgages, who assured: “The UK economy is reliant on our housing market and the government is committed to doing whatever is necessary to keep the economy moving.
“We are expecting government initiatives to be announced over the next few months, specifically for the housing market, in addition to the extension of the ‘help to buy’ scheme.
“The government will want to ensure banks and lenders remain active for first-time buyers, who may see themselves benefit from a short term reduction in property values.”