First-time buyers in Scotland say a system keeps them off the property ladder, meaning they often have to find two separate deposits to secure a home.
Paul Bradley and his partner have been saving for 10 years and are still a long way from affording a studio in Glasgow.
They’ve saved up a large enough deposit to convince lenders to give them a mortgage, but Paul says the reality is they’d have to bid £20,000-30,000 over the official appraisal to buy a flat.
Paul said, “People just can’t afford to pay the extra bail that’s needed.”
In Scotland, mortgage providers only award based on the property’s declared value on the home report – and not the actual amount paid by a home buyer.
This is especially a problem for first-time buyers who don’t have cash from a previous sale.
Glasgow-based mortgage advisor Gerry Hughes likened the situation to a “double deposit”.
He said: “In Scotland the vast majority of properties are selling at least 10% above the Home Report value.
“If you don’t have Mom and Dad’s bank or someone to help you, you could save very hard to get a 10% down payment and that won’t be enough to get you the property.”
For example, if a flat is valued at £120,000 on the home report, a 10% down payment would be £12,000.
However, an offer of £138,000 could be required to actually buy the property, leaving the buyer to find an additional £18,000.
Under the current system, the buyer cannot borrow this extra money, meaning they face an upfront cost of £30,000.
This is not the system in the rest of the UK, where mortgage lenders can make loans based on the amount actually paid for the house.
Mr Hughes said: “The lender is not interested in the money you pay over and above the assessment.”
He said the Home Report system, introduced in 2008, meant Scottish homebuyers had to put up a lot more money up front.
Anyone selling a home in Scotland is required to obtain a Home Report which includes an inventory of the structure, an energy report and a valuation.
It replaced the old system still in force in the rest of the UK, where prospective buyers pay to view any property they wish to purchase.
Although the property report means buyers don’t have to pay for multiple surveys, it means they typically can’t borrow money above what the report says — even though most properties sell above that price.
According to a recent Bank of Scotland study, in 2022 first-time buyers had to expect an average deposit of £41,442 to climb the ladder.
For Glenna Jones, her generation is “always stuck in that early 20s feeling” because private rents are so expensive.
“It’s so expensive just trying to pay rent. So if you’re trying to get up the real estate ladder and meanwhile be a private renter, how is that even possible?”
Glenna says when she tries to address this issue with older generations, she “always gets fired.”
“I was reading on a website the other day about how to get mortgage help and one of the main things they say you should cut back, live with your parents again or buy a basic car.
“Not everyone has parents to live with, that’s not realistic, and I can’t afford a car.”
She added, “I’m from a working class background and I definitely don’t have the financial support of my parents.”
For Aggie Verity, owning your own home feels like “a dreamscape.”
“I think we’re missing something,” she told BBC Scotland of her generation.
“We continue to pay the costs of this deregulated rental market where we seem to trust landlords to regulate themselves.”
She says her father had already bought his own house for £19,000 by the age of 25.
“I’ve just looked around carefully and for a house the same size you’re paying £300,000 now,” she said.
For Mr Hughes, a key step in helping younger people climb the real estate ladder would be to “do away with the home report”.
He said he had been working in the market well before the home report arrived, and although buyers would have to pay for multiple appraisals, he “would be happy to pay for a couple of appraisals at a cost of a few hundred pounds rather than thousands of pounds via appraisal.” of a property”.
“When I started, the market was very different,” he said.
“There doesn’t seem to be any help out there now to try to help first time buyers in the market and that’s something that really needs to be looked into.”
He added, “The hopes and aspirations we put in our children are being taken from under their feet.”
Paul Bradley agrees that the government needs to modify and amend legislation to make it more fit for purpose in 2023.
He said: “People just can’t afford to pay the required extra bail on top of the normal bail we all have to pay.”
For Aggie, she’s hoping for a more regulated rental market to discourage profitable landlords from raising rents.
She said: “I’m not dreaming of social mobility right now, I’m dreaming of security and stability and knowing that I will have this roof over my head in the future as well.”
A Scottish Government spokesman said: “Scotland remains a good place to buy a first home, with the average first-time buyer spending almost £100,000 less on a property than those in England.
“Our first-time buyer exemption from transaction tax on land and buildings saves first-time buyers up to a further £600.”
The spokesman said the Scottish Government was unable to influence the lending criteria of individual mortgage providers and said it was committed to longer-term reform of the rental sector to improve standards and affordability.
They did not respond to BBC Scotland’s specific question about whether they would consider scrapping the Home Report.
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