Selling to first-time buyers: What are the pros and cons?

Selling to first-time buyers: What are the pros and cons?

As well as achieving a price that works for you, being able to attract the right kind of buyer can mean a smoother and quicker process when selling your home.

In fact, your buyer’s position can have a huge effect on your property sale.

Here, we’ll explore the pros and cons of selling to a first-time buyer and outline what you can expect from the process…


Who is classed as a first-time buyer?

A first-time buyer is anyone who hasn’t owned a property, either in the UK or abroad, before, including inherited property.

For those buying together, both buyers must be classed as first-timers to qualify for things like stamp duty exemption.


What help do first-time buyers get from the government?

First-time buyers can benefit from several incentives and schemes on offer to help them get on to the property ladder…


1. First-time buyer stamp duty

First-time buyers in England and Northern Ireland qualify for an additional stamp duty exemption, meaning they pay no tax on the first £300,000 of a property’s purchase price, up to a maximum price of £500,000.

Joint buyers must both be classed as first-timers to qualify for this.


2. Help to Buy

The Help to Buy scheme offers first-time buyers the opportunity to boost their deposit with an equity loan or buy a share in a property through Shared Ownership.

Help to Buy equity loans cover 20% of a new-build property’s purchase price outside of London, with the buyer putting down a 5% deposit and a repayment mortgage covering the other 75%.

The Shared Ownership scheme, meanwhile, sees first-time buyers purchase a share in a property and pay reduced rent on the portion they don’t own.


3. The 95% mortgage guarantee scheme

Under this scheme, the government has pledged to guarantee a portion of each mortgage offered to first-time buyers with 5% deposits.

This provides a greater level of security for lenders but could enable buyers with limited deposits to take that first step on the property ladder.


The pros and cons of selling to a first-time buyer

There are a host of pros and cons that come with selling your property to a first-time buyer…


Pro: First-time buyers have nothing to sell

The one major plus of selling your property to a first-time buyer is speed.

Because a first-time buyer has nothing to sell, your property chain will be cut short.

This can mean a speedier completion and less risk of a chain collapsing.


Con: First-time buyers can be tied to tenancy agreements

Although on paper selling to a first-time buyer can be attractive because they have no property to sell, they could be tied to a lengthy tenancy agreement.

Always check your buyer’s situation if they’re renting and find out how long their tenancy has to run, or if they have a break clause they can activate.


Pro: First-time buyers can be keen and pro-active

For many first-time buyers, owning a property may have, at times, felt out of reach.

If you’re selling to one, it’s likely they’ll be extremely pro-active and keen to complete quickly – simply due to the excitement that comes with first-time home ownership.


Con: First-time buyers can sometimes have funding issues

Buying a property for the first time is exciting, but it also requires a lot of money.

For first-time buyers, many are metaphorically scraping together the pennies to buy their first home and so funding issues can sometimes crop up.

Always ask your estate agent to request a mortgage agreement in principle from your buyers if they’re first-timers, as this will help to verify their finances and give you peace of mind that they’re able to proceed.


How to attract first-time home buyers

If you’re selling your home and are keen to attract first-time buyers to the table, there are some steps you can take alongside your estate agent…


1. Use the right estate agent

Try to use an estate agent with experience of selling properties like yours in your area.

Firstly, they may have a database of eager first-time buyers looking for properties just like yours, and secondly, they should be able to offer you plenty of advice on the things you can do to attract first-timers, based on their experience.


2. Market your property in the right places

The average age of the UK first-time buyer is 34.

So, your agent should be marketing your property in the places where those kinds of buyers are active.

That means social media channels like Facebook, Twitter and Instagram, as well as the main UK property portals like Rightmove, Zoopla and OnTheMarket.


3. Make sure your listing photos are high quality

First-time buyers will spend a lot of time online, searching for properties to view.

That means they’ll see a lot of potential properties – so yours has to stand out from the crowd when it’s listed on the major online property portals.

Make sure your agent is offering professional photos when they market your home, or consider hiring a property photographer yourself.


4. Put yourself in your buyer’s shoes

If you were a first-time buyer, what would you want from your first property?

Put yourself in your buyer’s shoes and think about what they need and expect from a property in your area.

Then you can take a forensic look at your home and assess where it meets those needs and where you can improve it to appeal more to first-timers.


Further reading…