Should Conveyancers Just be Targeting First-Time Buyers?
In most law firms these days, marketing plays a part in everyone’s role – including conveyancers. Where you position yourself in terms of service, fees and accessibility are all important factors to take into consideration when trying to get the kind of work that you want in through the door.
With months of speculation about whether first-time buyers are really struggling with getting onto the property ladder despite Help to Buy and other schemes (or through family members funding around a third of first-time buyers’ property purchases), are these the transactions that are going to keep us as busy as ever throughout 2017?
Decreasing numbers of home-movers
Let’s look at home-movers. Traditionally, these are great clients to have because they’ve been through the purchase process at least once already. They know that searches have to happen, that they have to wait for searches to happen and are at least aware of the things they need to provide us with as buyers. Usually, house-movers will buy and sell a property at the same time, or the transactions will take place in close proximity to each other, which makes our life easier and our jobs more efficient.
However, if it feels like house-movers’ numbers are dropping slightly, you may be right. According to Lloyds Bank Homemover Review, the number of home movers fell by 4% in 2016, which is the first time that has happened for 5 years. There could be a number of reasons for this – a lack of affordable properties to move into creates a vicious circle, whilst market uncertainty is widespread no matter how high up the property ladder a buyer is.
Is the decrease of home-movers impacting on first-time buyers? You would imagine that without second-time buyers moving out of their first homes, there would be a lack of properties available at an affordable price and a suitable size for first-time buyers.
High expectations from first-time buyers
However, according to research by Clydesdale and Yorkshire banks, over 70% of first-time buyers in 2015 wanted to buy a house rather than a flat, which is more traditional for first-time buyers because of its size, ease of maintenance and ultimately its cost. The most logical explanation for this is because first time buyers are getting older and so will be looking for longer term family homes rather than a starter home. It appears that first-time buyers are looking for the same sorts of properties that second-time buyers are.
So, the question remains whether first time buyers are the ones that are going to be most lucrative for conveyancers. In contrast to home-movers, first-time buyers are highly attractive to sellers – they have no chain and so are usually far more flexible, which speeds things up or slows them down in line with the seller’s requirements.
According to the Halifax, first-time buyers can afford the same level of houses as home-movers too. The current national average deposit paid by first-time buyers is £32,321, which equates to 16% of the average property price. This means that first-time buyers are able to purchase their first properties for over £200,000. In fact, only around a third of first-time buyers purchased their first property at a value beneath the stamp duty threshold of £125,000 in 2016.
In comparison, home-movers paid an average deposit of £96,968 in 2016, according to Lloyds Bank research. This is an increase of 33% from 2009 and a 6% increase over the last year alone.
To summarise, first-time buyers are by no means the only type of client that conveyancers should be looking for, but if you’re thinking that first-time buyers aren’t the clients for you, it may pay you to think again.