5 ‘must know’ facts for first-timer buyers in 2023

Getting a foot on the property ladder remains a goal for many, especially as every UK region has seen annual rental value growth, according to the latest HomeLet Rental Index.

Many may wonder whether 2023 will be a good year to make a property purchase so to steer buying novices in the right direction, here are 5 facts for 2023’s first-time buyers.

1. Mortgage interest rates have fallen…and may continue to do so
A cooling housing market and falling inflation is widely forecast to result in lower mortgage rates this year, with tracker mortgages potentially offering attractive repayments. The financial experts’ advice is to start a conversation with a lender or mortgage adviser to establish what is possible, based on personal circumstances, rather than be influenced by newspaper headlines and rumours.

2. The Government has extended its Mortgage Guarantee Scheme
In late 2022, the Government extended its Mortgage Guarantee Scheme on a UK-wide basis. Rather than end in December 2022, it now runs until December 2023. The initiative allows first-time buyers with a 5% deposit to access a greater range of mortgages. The scheme can be used to purchase homes worth up to £600,000, subject to affordability and eligibility checks.

3. House prices have stabilised
When a panel of mortgage experts were asked to deliver their verdict on prospects in 2023, they reported it could be a good year ahead for first-time buyers. One of the factors behind the positivity is the stabilisation of house prices. Runaway values that soar month-on-month will be far less frequent and, in some places, prices may even drop back slightly – increasing affordability for first-time buyers.

4. Stamp duty favours the first-time buyer
Many first-time buyers in England, Scotland and Wales will continue to pay nil or reduced stamp duty when buying their first home. Cuts made to stamp duty thresholds in England in 2022 will stay in place until 31st March 2025. First-Time Buyers’ Relief has increased to £425,000, meaning purchases below this value will not incur a penny of stamp duty. The maximum property value that is eligible for First-Time Buyers’ Relief has also increased, from £500,000 to £625,000. This means the remainder of a first-time buyers’ purchase between £425,000 and £625,000 will be taxed at 5%.

In Scotland, Land and Buildings Transaction Tax (LBTT) also favours property novices. A special relief for first-time buyers is available, with properties bought for £175,000 or less attracting nil tax. There is no first-time buyer tax relief in Wales but Land Transaction Tax (LTT) only applies to properties bought for more than £225,000 .

5. The LISA scheme makes saving for a deposit easier
First-time buyers aged between 18 and 40 can open a long-term savings product called a Lifetime ISA (LISA), exclusively designed to help save for a deposit. The scheme sees the Government ‘top up’ money saved – with a 25% bonus up to a value of £1,000 per year. For example, £800 put in a LISA over 12 months will be topped up by £200, resulting in a savings pot of £1,000.

Savers can add £4,000 every year to the account and when two first-time buyers are purchasing a property together, they can combine their LISA-saved deposit. There are some restrictions attached to a LISA, however. These include the buyer purchasing a property costing £450,000 or less and using a mortgage to fund the purchase.

If you are a first-time buyer and would like more moving advice, along with a selection of properties for sale, contact our estate agents today.

Could pets be the key to successful lets in 2023?

Discussing lets with pets in January is very apt. Chinese New Year falls on the 22nd of the month – traditionally celebrated by assigning one of 12 animals to another year (it’s the rabbit in 2023).

The year ahead could be monumental for landlords and tenants. It’s widely accepted that the Government’s A Fairer Private Rented Sector white paper will be adopted before the end of 2023 – and that means renting with a pet will be made easier.

Reluctance to rent to pet owners

Research indicates that private tenants are animal lovers living in a pet-reluctant rental sector. The results of a 2022 survey by the Tenancy Deposit Scheme Charitable Foundation found 38.6% of tenants had a pet in their rental property, but only 47.9% of tenants admitted to being allowed a pet as part of their tenancy agreement.

The anti-pet sentiment is reflected on the other side of the lettings equation as well. The English Private Landlord Survey 2021 – the most recent published by the Government – found that 45% of landlords were unwilling to let to tenants with pets.

Pets force tenants to move

With such statistics in evidence, it comes as no surprise that renters are willing to move home in order to live with a cat or dog. The Deposit Protection Service undertook its own research on the matter of lets with pets. When questioned in 2022, 30% of renters who moved property between October 2021 and March 2022 had done so to specifically accommodate a pet. For comparison, only 7% of renters cited pets as the most significant influence over their decision to move in 2021.

Tenants leaving one rental property in search of a pet-friendly alternative is something landlords need to consider in 2023. Finding new tenants involves time and money – check out, check in, inventories, referencing and potential void periods, so keeping happy tenants in place – perhaps even those with pets – is sensible.

Domestic animals, damage & a different approach

A major pet deterrent among the landlord community, however, has been damage caused by animals but it’s actually a bit of an urban myth. Steve Harriott, the CEO at the Tenancy Deposit Scheme has publicly said it doesn’t see a lot of disputes involving pets specifically.

Persistent reluctance surrounding pets may be forcibly eradicated anyway. The adoption of A Fairer Private Rented Sector white paper will correct much of the negativity surrounding tenants with domestic animals.

Pet-specific details in the Government’s white paper include:-

  • Legislation that ensures landlords do not unreasonably withhold consent when a tenant requests to have a pet in their home’
  • The right for tenants to challenge landlords who refuse to let with a pet
  • An amendment to the Tenant Fees Act 2019 to include pet insurance as a permitted payment, which should offset potential pet damage

The changes detailed in the white paper are a step up from the Government’s current stance on lets with pets. In 2021, it altered its Model Tenancy Agreement to say: “landlords will no longer be able to issue blanket bans on pets. Instead, consent for pets will be the default position, and landlords will have to object in writing within 28 days of a written pet request from a tenant and provide a good reason.”

For now, the Government’s Model Tenancy Agreement isn’t mandatory when agreeing a new let. Landlords are free to adapt what is suggested or create a bespoke tenancy agreement, which we suggest should always be done in tandem with a professional letting agent. We are monitoring the introduction of the white paper and will report any specific details that clarify whether landlords will retain the right to refuse tenants with pets.

Our lettings team frequently receives requests from cat and dog owners. Please get in touch if you have a pet-friendly property to list.

January Property Market Analysis

Historically speaking, the property market is cyclical with familiar, repeating patterns – and moving into an anticipated new phase was particularly evident in December. While there was a traditional and circumstantial pause in the sales market – thanks to Christmas and a recovering mortgage market – the lettings sector powered ahead.

Even in sales, there was a shift in dynamics. The end of 2022 saw us move firmly into a buyers’ market, with more homes for sale and tempered asking prices. Here’s where the ebb and flow leaves us as we enter 2023.

What’s gone up?

Sale stock is slowly improving. Figures released by Propertymark revealed the average number of homes for sale per members’ branch is now 33. This has risen from 30 and is creeping upwards towards the pre-pandemic average of 38 per branch (an average noted between 2015 and 2019).

Number of mortgage products rise

The mortgage market ended the year firmly in a recovery phase. As well as improving mortgage rates (more on that later), there is more choice. As of December 2022, borrowers had access to around 4,000 mortgage deals. This was up significantly from the autumn, when the Mini Budget caused product numbers to plummet to 2,560.

Rents have continued their upward trajectory too. The latest HomeLet Rental Index found that rents across the UK ended 2022 on a more expensive note. A new average rent of £1,175 is 0.3% more expensive than seen in the previous four week period.

This latest rent rise caps a year of ever-increasing rents in the UK. Research by Ocasa found the average rent price increased by 10.8% between Christmas 2021 and Christmas 2022. This was a jump from £1,060 per month to £1,175.

Staying with lettings, Scottish buy-to-let purchasers will notice their tax bill has gone up. On 16th December 2022, the Additional Dwelling Supplement – a tax on second homes that is part of Land and Buildings Transaction Tax – rose. The new rate is 6% – up from 4%.

So what’s falling? With the pandemic’s property frenzy over, normality resumes and prices are beginning to adjust. Figures from Rightmove showed that in December, the average price of a property coming to market fell by 2.1% – that’s £7,862 less.

Still 7 buyers for every property

News from Propertymark also suggests that the unsustainable sales market seen in Covid times has fizzled out – but demand hasn’t totally disappeared. While earlier in 2022 there were 11 buyers for every new property coming to market, this number has fallen. According to its report released in December, Propertymark’s members said they had seven buyers per property at each of their branches.

Sometimes figures rise and fall at the same time, and this can be said of future rental values. Zoopla’s rental market forecast for 2023 suggests the cost of renting a property will continue to go up. The portal does say that the rate at which rental values will increase is due to come down. To illustrate – rents rose by an average of 12% in 2022, while they’re expected to rise by 5% in 2023.

Fixed-rate mortgage costs fall

Although the Bank of England used its December announcement to raise the interest rate to 3.5%, it didn’t have an effect on new fixed-rate mortgages. In fact, the cost of taking out a fixed-rate mortgage fell at the end of 2022. When compared to rates in October, the month of December offered cheaper borrowing.

According to a report in Forbes Advisor, the average cost of two, three- and five-year fixed rate mortgage deals across all deposit levels fell in December. Rates at 5.30%, 5.28% and 5.03%, respectively, compared favourably to highs of more than 6.50% in October. The most competitive fixed-rate mortgages are now under 4.7%.

If you would like to know more about your local property market, please get in touch