Property news: How first-time buyers can beat investors in homes battle

Lenders are loosening their grip on the purse strings. But just as mortgages become more readily available, first-time buyers are facing another barrier.

They are doing battle with cash-rich buy-to-let investors for properties at the lower end of the market. The latest survey by the Royal Institution of Chartered Surveyors shows a small rise in the number of homes for sale in Yorkshire but it is not enough to satisfy an insatiable appetite for property.

The supply and demand problem is pushing up prices and first-time buyers are losing out to those who want homes to let.

Ian Briggs, of Dacre, Son & Hartley estate agents, said: “The buy-to-let rush has excluded first-time buyers from the market as sellers inevitably prefer to sell to investors who are able to secure funding upon very relaxed lending criteria.”

The problem has been exacerbated by the race to buy before the new stamp duty rate rise for additional properties is implemented. From April 1, investors and second home owners will pay an extra three per cent in stamp duty on all properties over £40,000.

While the odds may not appear favourable, there is hope for those hunting for a home. Rightmove believes that adverse taxes may deter would-be landlords after April and says first-time buyers will be encouraged by the government’s help-to-buy schemes and low interest rates.

Patrick McCutcheon, head of residential at Dacre Son & Hartley, says the key is to be prepared and to ask for help.

“First-time buyers need to get their mortgage agreed in principle prior to starting their property search. Like us, a lot of agents have their own mortgage advisors in-house these days, so it’s worth considering a meeting with an agent and a financial adviser at the same time to get a clear idea on the finance options available.

“It also helps if first-time buyers have regular contact with estate agents and make sure their local agents know exactly what they are looking for.” He also suggests asking local estate agents which geographical areas are much more investor focused so first-time buyers can consider alternative neighbourhoods nearby.

“When it comes to people selling their property, in the majority of cases cash is king with vendors tending to sell to the party that offers the best cash deal. Investors typically see a property purchase as a business transaction and deal in cold hard facts. They are therefore less emotionally attached to a purchase and, as long as the figures stack up, the sale will go through.

“That said, if it was a dead heat between an investor and a first-time buyer who had their mortgage agreed in principle, and the condition of the property meant that the mortgage application won’t get derailed, I think a lot of vendors would prefer to sell to a first timer.” Buying new is another option. It is usually quick, easy and there is no chain and little chance of being gazumped or outbid.