You don’t have to look too far to find the horror stories, from reports in the media about the credit crunch to the derelict toilet block in Fife, which sold for over £60,000. But that doesn’t mean your dream home isn’t out there and within your means. Karin Goodwin quizzes the experts for their top tips, as well as speaking to buyers who have come up with their own creative solutions to getting a foot on the property ladder. Elsewhere, Sarah Beeny gives wannabe developers the inside track and we suggest a cornucopia of interiors ideas to help you create the perfect home. And for those who aren’t ready to take the plunge, we present an indepth guide to renting.
Though she may have started house-hunting before the credit crunch hit the headlines, it took a quick look at the property market to tell Michelle Davies, 29, a software engineer who had lived in a rented flat since arriving in Edinburgh from Australia six years earlier, that her budget of £80–£100,000 was not going to go far. But, having decided she wanted to own a home, she rolled up her sleeves and embarked on her search.
Most of the studio and one bedroom flats she saw were ‘pretty horrible’ but others passed the test. Whenever she found somewhere she liked, she would carefully work out her best offer and faithfully put in her bid. When the sixth offer was unsuccessful, she started to lose hope. ‘I think the most depressing time was when I lost out by just £600, which was pretty hard to take’, she says. But later, over commiseration drinks with friend and former flatmate Gillian Blackburn, a plan began to form. ‘I was having a moan about the whole thing and Gillian just suggested, “why don’t we buy together?” As soon as we’d looked at a few places we realised that this was something that could work.’
Davies and Blackburn, a 30-year-old architect, had only viewed a handful of flats across the city before a spacious two-bedroom place in Leith tugged at their heartstrings. ‘The living room was a converted ballroom and we both love dancing so we were convinced it was meant to be’, laughs Blackburn. Both were amazed when their offer of £197,000 was accepted and they became the proud owners of their first home.
‘We certainly didn’t expect to get a place so soon after my experience’, admits Davies, ‘but it’s fantastic. I have to say it’s all worked out for the best.’ Now, instead of a pokey studio, she has a large living room and dining kitchen, where she can entertain friends. For Blackburn the benefits were also clear. ‘I think because Michelle and I had been flatmates before, we knew we would get on. And I don’t actually like the idea of living on my own.’
From the outset ground rules were set; everything was split 50/50 and they agreed to reassess the situation after three years, allowing either party the option to sell up if circumstances had changed. The mortgage was trickier to arrange; the first fell through because the property was above a shop, the second because Davies was Australian, but, with the help of specialist online broker Share to Buy, they finally secured the finance. Contracts were exchanged and the legal agreement was signed and sealed. Just over a year later the girls are still delighted with their new home.
With a chilly wind now blowing in the housing market, James Cartlidge, director of Share to Buy, has seen a steady growth in people clubbing together with friends and even family in order to afford the property they want. ‘When we first started our service in 2004 people told us it was a silly idea’, he says. Now the company is going from strength-to-strength, has a Facebook site for potential joint buyers, and will hold its first ‘speed dating’ event for would-be homeowners in London later this year.
To anyone familiar with the property market, it will come as no surprise that young professionals like Davies and Blackburn are having to pool resources to get a foot on the ladder. It’s a confusing time for most potential property buyers. Though the stark credit crunch warnings may hint at bargains, the average house price in Scotland is still £145,531 and is even pricier in the cities: over £176,000 in Glasgow and over £210,000 in Edinburgh. The slow-down may be the most dramatic in years, but while UK house prices have fallen by 1%, growth is still 0.2% in Scotland.
The recent slow-down in growth comes a little too late for many. Last month a ‘flat’ measuring just 150sq ft went on the market in the Scottish capital for £55,000 with property experts expecting a bidding war, while a derelict toilet block in Fife sold for £60,000. What’s more the banks are decidedly nervy when it comes to borrowing, making mortgages expensive and difficult to obtain, and rents are also predicted to rise as a result.
David Marshall, business analyst for the ESPC, admits that life is still tough for house hunters in Edinburgh. ‘The market is certainly rising far more slowly than it has been in the last two years,’ he says. ‘Growth has slowed from 10-15% to around the 3% mark and in coming months we would expect to see it fall further. But though there’s been a significant cooling, affordability has already decreased so much.’
All is not lost, though, you may just need to be a little more open-minded about location. Up-and-coming areas in Edinburgh include Gorgie, which Marshall says has seen a growth of 20% in the last two years, while flats in Meadowbank and Leith are available for under £125,000. And though any investment potential will be relative, they are certainly more affordable than many other areas. ‘We also see a lot of people now looking outside of Edinburgh towards Fife, Kinross, Lochgelly or Dunfermline, to find something they can afford,’ Marshall adds.
Award-winning Glasgow estate agent Paul Murphy is also cautiously upbeat. He admits that while much of the property traditionally snapped up by first time buyers may now be out of the price bracket, there are still options. ‘We are seeing people moving into different areas to get round the market,’ he explains. ‘I sold an ex-council flat in Auldhouse in the Southside for £90,000 recently; it’s a decent area at an affordable price. There are also two bed flats in Govanhill and Crosshill to be had for reasonable prices. And of course the East End is still a good bet.’
Whatever the circumstances, everyone involved in the property business agrees you have to do your homework. The ESPC recommends house hunters familiarise themselves with the market before deciding what they want. It’s worth typing up a brief to give to agents personally, to ensure you are contacted when the right property comes onto the market.
Carol Henderson, conveyancer at Warners Solicitors in Edinburgh, believes that getting your solicitor involved earlier leads to better service. Word of mouth is still the best way to find a solicitor, though gathering a couple of quotes by phone is a good way to start. According to Henderson, an old-fashioned face-to-face meeting allows you both to get a feel for expectations.
‘A solicitor can give you lots of advice before you even start and can tell you what price certain streets are expected to go for so that you can really target your search,’ explains Henderson, who also believes that people should view as many flats as possible to get to know the market. ‘Then you can be confident when you find a property you like that you’re making the right choice’.
Of course, before making that choice you need to have your finance in place. The heady days of 110% mortgages are over, she says. The number of lenders offering 100% mortgages has decreased substantially in the last six months, with only a handful now offering the service in Scotland, and rates and fees for many products are still relatively high despite interest rate cuts.
Kirsty Baird, financial advisor with Warde Graham Consulting in Glasgow, stresses the importance of sticking to a realistic budget in the current economic climate. ‘The credit crunch has serious implications for first time buyers, who often have little or no deposit, and are working on a tight budget.’ Baird has also seen companies tighten their lending criteria. ‘I come across quite a few first time buyers who are declined for high percentage mainstream mortgage deals as a result of a few minor “adverse” credit issues, such as late credit card, loan or mobile phone payments.’
Rather than be tempted to jump into alternative deals with companies willing to borrow the money at higher rates, she advises taking some time to work on your credit history before getting into the property market. And even for those with a good credit rating, waiting until you can save up even a 5% deposit can open up a far wider range of value for money mortgages. Once you’re ready to take the leap, realism is essential. ‘Many lenders now base decisions on ‘affordability’, considering your monthly income and payments to credit commitments, so a full budget plan is essential,’ she says.
For many, the whole process can become incredibly trying. In surveys, moving house repeatedly appears in the top ten most stressful events in life. ‘I found it really tough at times,’ says 31-year-old Grace Cuthbert who bought a flat in Glasgow’s Govanhill three years ago with her boyfriend. ‘It was difficult to get time off work to do viewings so I was always rushing around. I worried about money and our mortgage being accepted and then there was the disappointment every time we failed to have our offer accepted. It sort of took over my life.’
Dr Cynthia McVey, a lecturer in psychology at Glasgow Caledonian University, suggests problem-focussed coping for potential buyers – facing up to the reality and looking for practical solutions, from finding an investor to considering a different location or smaller property. Secondly, deal with the emotional factors and talk to friends or family for support. Above all, McVey advises, keep things in perspective and don’t be tempted to pay over the odds. Think instead, she suggests, of looking for a new home as an exciting challenge.
Thinking creatively can be one approach and moving away from the mainstream market and tired old round of estate agents can be inspiring. If you’re fed-up of tenements, then lots of quirkier properties - from railway cottages and old signal boxes to telephone exchanges - can be found at property auctions and if you’re prepared for the hard work and the budget needed for conversion it can be a rewarding way of finding an extra special home. Repossessions also regularly hit the auctioneers’ books and the need for a quick sale means prices are usually below average.
Shaun Vigers, director of SVA Property Auctions, says that if you are canny, you could still snap up a bargain. He advises sitting in on auctions first to see how they work. Finance needs to be in place before you bid and you should always view the property thoroughly and have a solicitor look over the deeds.
If the pace seems off-putting, the Scottish Civil Trust’s Buildings At Risk register is another option, which Terry Levinthal, trust director, insists offers huge scope. This is where ‘sweat equity’ and personal qualities count just as much as hard cash. ‘Historical buildings don’t need blockbuster budgets,’ Levinthal says. ‘There are plenty of examples of people who have done it on a shoestring but what they have had on their side is time, patience and a willingness to do a lot of the work themselves.’
You may need to be tenacious and determined to secure your dream property. Flexibility is also key. ‘You need to be realistic and there is an awful lot of hard work ahead of you,’ says Levinthal. ‘But if you can handle that you can end up with something really special.’
Self-build is another increasingly popular option. An estimated 15,000–20,000 people built their own homes last year in the UK, and with the average cost at £147,000 and a wider range of mortgages catering for the market than ever before, it is easy to see the appeal. ‘People are encouraged by the profile of self-build on shows like Grand Designs and they are seeing the space and the lack of compromise that can come with it,’ says Mike Hardwick, self-build advisor for the National Self-Build and Renovation Centre, who built his own home several years ago. ‘The mass produced have been designed for maximum profit for the developer and people are getting fed up of that. They don’t want to pay top dollar for a home where they can hardly fit in the furniture.’
Scotland, he claims, is the ideal location for the self-builder, with plenty of open spaces, natural materials and beautiful landscapes. And it needn’t be too difficult: advice is available in spades at the self-build centre in Swindon, which also runs a telephone helpline, while the best way to find a plot is by registering with online database Plot Search.
Hardwick warns against having a set idea of the perfect plot. ‘It doesn’t exist,’ he says. ‘Usually you find yourself looking at an abandoned petrol station or someone’s muddy backyard.’ Neither should you be afraid of knocking down an existing structure to build what you really want - it means that water and electricity, along with the legal framework, will already be in place. ‘And the more work you’re prepared to put in, the cheaper it is.’
Steve James, a 52-year-old software engineer, is living proof of that. He built his own unconventional house in Galloway, with straw-insulated walls and a turfed roof, for just £4000 in ten months. Friends helped with labour, and he salvaged most of the materials. Rocks, sand and turf all came from the local land; the wooden worktops come from trees felled in Pollok Park; the Belfast sink from a former primary school; a velux roof window was found in a skip; and the pièce de résistance, a Tudor-style panel timber ceiling, was constructed out of changing cubical doors from Glasgow’s old Govan public baths.
The result is a slightly medieval-looking but cosy, watertight and ecologically-sound home with views to die for. There is a catch – the property has no planning permission and sits on someone else’s land, and he has only been given until 1 January 2011 by the landowner before it must be torn down.
Nevertheless, he stresses that the project was partly about raising awareness of what could be done for a fraction of the cost of an average home and insists anyone could be taught the skills they need to do it. ‘I wanted to prove you didn’t have to get a mortgage and work like a slave just to afford to live,’ he says. ‘Homes can be built cheaply, but it’s the land that accounts for about 85% of the cost, and it’s the planning permission that really eats up the money. I’ve shown it can be done and I’ll do it again.’
And he’s not alone. Despite all the financial handwringing, whether you opt to share with friends, get your DIY skills up to speed, or simply set yourself a target date and start saving, with some patience, determination and flexibility, you too can buy your dream home.