Collas Crill property expert Sharon Therin talks you through everything you need to know if you're thinking about buying your first home.
What is a first time buyer?
In Jersey a first time buyer is a person who has housing qualifications AND has never owned nor had an interest in, a house or flat in Jersey or elsewhere.
A first time buyer can purchase by share transfer, flying freehold and freehold and, assuming the value of the property is less than £450,000 is entitle to pay a greatly reduced sum in terms of the stamp duty if it's a freehold or flying freehold purchase, or land transaction tax (for a share transfer purchase) on the purchase and associated loan.
It is worth noting that the usual first time buy threshold is £400,000 but for the past few years, the States budget has increased the threshold to £450,000 to encourage the first time buyer market and help people get onto the property ladder.
The purpose of the scheme is to help buyers who have already saved up 5% of the price of the property they wish to buy
What about the States starter home deposit loan Scheme? Can that help me?
The Scheme was set up by the States of Jersey with a pool of £3 million with the express purpose of helping first time buyers and those already in their first home to move up the ladder releasing suitable first time buyer properties into the market place. The purpose of the scheme is to help buyers who have already saved up 5% of the price of the property they wish to buy. Provided that they can show that they can afford the mortgage repayments The States of Jersey will help by making an interest free loan available for a deposit of up to 15% of the property value on the following conditions:-
- You must provide a minimum deposit of 5% of the property price from you own savings;
- The States of Jersey will lend you up to a maximum of 15% of the property price at 0% interest;
- The remaining balance will be provided by the mortgage lender (currently Skipton International Limited);
- Skipton International Limited will assess and approve your mortgage application independently of the deposit loan;
- Skipton International Limited will register a charge over your property for the amount of you mortgage and The States of Jersey also register a charge over you property for the amount of the deposit. Should you sell you house, then naturally both loans will be repayable.
For further information on this scheme contact the Affordable Housing Gateway Team on 449080 or email hsggateway@gov.je
How do I make the best use of my legal adviser?
We are there to help and guide you through the transaction and so don't be afraid to pick up the phone and call or email us with any questions as and when they arise. Remember we have agreed a fixed fee with you and it doesn’t matter how many times you call or email us, you fee will remain the same. We are checking the boundaries of the property and gathering all sorts of information for you benefit and will be happy to discuss any concerns you have big or small.
I already own a property, can I still qualify as a first time buyer?
In circumstances, yes although not for the stamp duty deductions referred to above. For instance –
- If you purchase a flying freehold flat but wish to purchase a house in a designated "first time buyer" housing development such a La Providence then as long as you sell you flat to another first time buyer then you can purchase the house;
- If you purchase a share transfer flat but with to purchase a house in a designated "first time buyer" housing development as described above then you may qualify even if you don't sell your flat to another first time buyer.
- If the Housing Minister uses his discretion to allocate first time buyer statues to persons who may have owned land, perhaps by inheritance provided that the land does not include residential accommodation
- If the Housing Minister uses his discretion to allocate first time buyer statues to a person who was married to or in a relationship with a person who did own property and thus it could be argued that they may have had an interest in that property.
A purchase for £299,000 with a £250,000 loan would currently attract stamp duty of Land Transaction Tax of £80 for the purchase and a further £80 for the borrowing. A non first time buyer purchasing the same property would pay £3,750 on the purchase and a further £1,310 on the loan registration.
We've decided that we want to buy a home, what should we do first?
Pay a visit to your bank mortgage team or mortgage broker to find out how much you can borrow. It is generally five times your salary or five times the joint salary of you and your partner. But do beware, if you have any outstanding debs this could affect the amount you are ultimately able to borrow.
Armed with this information, you can now start viewing properties! Make a list of the most important things the property much have, e.g. parking, a private garden, potential to extend. As a first time buyer you are in a strong position to strike a deal with a seller. If you find something you like don’t be afraid to make an offer at less than the asking price. They can only say no!
Having found a property you want to buy you will need to go back to your bank or broker to complete a formal application. Any offer to lend will be subject to you lender receiving a satisfactory survey on the property which confirms that is it worth what you have agreed to pay. While you pay the bank for this report, it is undertaken for the benefit of the bank and doesn't not look closely at the structure of the building. Therefore if you are buying an older property you might wish to consider have a more detailed survey undertaken. Bear in mind however that the more detail in the survey the more it will cost.
Now is also the time to appoint your legal advisers and get a firm idea of the costs. The estate agent dealing with the transaction will undoubtedly recommend two or three firms for you to call and get a quote for legal services. Your parents may also recommend their own lawyers. Do shop around and don't be afraid to ask what you are getting for your money. Bear in mind that this is the biggest investment you are likely to make and the cheapest quote may not always be the best.
An example of the stamp duty savings for a first time buyer are illustrated below:-
A purchase for £299,000 with a £250,000 loan would currently attract stamp duty of Land Transaction Tax of £80 for the purchase and a further £80 for the borrowing. A non first time buyer purchasing the same property would pay £3,750 on the purchase and a further £1,310 on the loan registration.
