Article date: 29 July 2003
First-time buyers are being hit by an inflationary double whammy– after years of rising property prices, new research outtoday reveals the nation’s new property owners are forkingout almost £3 billion* just to move into their first home.
The extra expense of almost £6,000 per buyer on items such aslegal bills, tax, removals and basic furnishings comes as asurprise to most first-time buyers. In fact, almost nine in 10admit they underestimate the amount needed to cover costs on top ofthe actual property price.
Norwich Union’s study amongst almost 900 first-time buyersreveals that while 94 per cent set a strict budget when embarkingon the hunt for their first home, a quarter end up going overbudget – with the average overspend being more than£10,000.
But this doesn’t come as a surprise to the nation’sestate agents. The insurer spoke to 250 estate agents and eight outof 10 said that first timers always underestimate the costsassociated with buying a property.
And a quarter of all agents admit dealing with first time buyersis frustrating and time consuming.
Phil Spencer, expert house finder and presenter of ChannelFour’s Location, Location, Location, says it’s notunusual for new buyers to dwell on property prices and neglectthese hidden extras.
“It’s easy for them to get fixated on propertyprices and overlook the cost of moving in. And yet, as the surveyshows, these costs are often high and first-time buyers may end uphaving to borrow even more money on top of their mortgage.
“It pays to be prepared and well organised and I alwaysencourage new buyers to consider every expense, investigate thevarious costs and set their budgets accordingly.”
The Norwich Union study also reveals househunters often have areality check when they start house hunting – almost half ofthem had to lower their expectations once they starting looking andrealised the real cost of property.
But it seems that once they’ve seen their dream home, ittakes just minutes for first time buyers to decide that it’s‘the one’ – half make up their mind in under fiveminutes of walking through the front door.
To help people getting on the property ladder, Norwich Union haslaunched the insurance industry’s first home package tailoredto meet the needs of first time buyers.
Norwich Union’s product feature include a low startcontents sum insured, a fixed price** for the first two years and anumber of money saving offers from leading home suppliers.
Jill Willis, market development manager at Norwich Union, said:“Buying a home for the first time can be quite a daunting andexpensive time. There are all sorts of things to do and rememberand choices to be made.
“As our research shows, people are often on a very tightbudget – or in fact over-spending. We’ve worked hard totake some of the hassle away from first time buyers by developingthis all-round package, which not only provides insurance but alsogives a whole host of other benefits with cost saving andsimplicity in mind.”
And to help first-time buyers, Norwich Union has teamed up withPhil Spencer, expert house finder and presenter of ChannelFour’s Location, Location, Location to produce the top 10tips for first- time buyers.
- Sort out your finances. Find out how much you can borrow, geta mortgage offer in writing and find a solicitor to do theconveyancing - get one who isn’t overworked
- Write a search brief. List your ‘must haves’ andbe as specific as possible. List the bonuses and no-nos. This willkeep you focused and stop you falling in love with otherpeople’s lifestyles
- Use the Internet for initial property research. Most agentshave their own sites
- Visit a few estate agents in a couple of locations and asktheir advice. Explain you’re on a search-mission only andtalk to them about your needs - budget, space, where you work,preferred schools, leisure pursuits.
- Prepare a ‘Buyer’s Pack’. This showsyou’re serious and can proceed speedily. This should includea mortgage offer, evidence of the deposit you have available,solicitor’s details and all your contact numbers.
- Phone weekly. Don’t wait for details in the post, makeweekly calls to your agents to find out about newinstructions.
- Begin viewing. Once satisfied a property fits your searchbrief, begin viewing and make sure you turn up on time.
- View carefully and take notes of the layout and size. Considerhow rooms might be changed - remember only two things can’tbe changed - location and light. Have a second view at a differenttime of day, preferably at night
- Decision time. If you want to buy, make an offer in writing.If you think the asking price is high, start negotiations with alower ‘shot across the bow’ offer
- Do not let go. To ward off gazumpers and make vendors feelmorally bound to proceed, hassle your mortgage company to arrangethe survey and communicate regularly with solicitors and estateagents
For more details customers should contact Norwich Union Directon 0800 888 222 or visit the website atwww.norwichunion.com/firsttimebuyer
Jo Misson and Matthew Buchanan at QBO Bell Pottinger on 020 78612424 or Liz Kennett and Lucy Haughey at Norwich Union Press Officeon 01603 688263 or 07801 901 666
Notes to editors:
- Norwich Union commissioned Brand & Issues to research 250estate agents in July 2003. The insurer also commissioned You Govto research 884 adults who had bought their first home in the pastthree years.
* Based on average spend of £5,919 per first time buyer and0.5 million first time buyers in 2002. Full calculation is £2.95billion – using American billion (1,000 million)
** Fixed price for two years if you don’t make a claim,move house or ask us to increase your cover
- Eligibility criteria for a first time buyer quotation arethose who are in the process of buying or who have bought theirfirst home within the last 18 months
- Norwich Union is the UK’s largest insurer with a marketshare of around 16 per cent and is more than 1.5 times the size ofits nearest rival. It is also the largest personal linesinsurer.
- It has a focus on insurance for individuals and smallbusinesses. It insures:
- one in five households
- one in five motor vehicles
- more than 700,000 businesses
- Norwich Union products are available through a variety ofdistribution channels including brokers, corporate partners suchas banks and building societies and Norwich Union Direct.
- Norwich Union’s news releases and a selection of imagesare available on the Aviva internet press centre atwww.aviva.com/media
- An ISDN facility is available for studio quality broadcast.Call the press office on 08703 66 68 68
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