Nearly two-thirds of first-time home owners who wanted to move up the property ladder last year found themselves stuck. In two damning reports, these second steppers have been labelled the ‘ugly ducklings’ of the housing market – overlooked and struggling to move on with their lives. Their challenges included lack of demand from first-time buyers and high deposit requirements from mortgage lenders.

In the UK those trying to sell had had their property on the market for an average of seven months. One in eight had tried to sell their property before, without success.

A Lloyds TSB report says 61% of second steppers – former first-time buyers wanting to move – felt trapped. Of that number, 22% said it was harder to move than to get on to the property ladder in the first place.

A similar report by Rightmove underlines the situation thousands of second steppers find themselves in. According to the Rightmove study, the supply of first-time buyers is at its lowest for more than two years, helping to keep second steppers trapped. In six out of ten regions, Rightmove says the proportion of first-time buyers is fewer than 20% – meaning that second steppers have very few potential buyers for their properties. Some (7%) have put off starting families because they cannot move, and 11% are moving despite having to take a loss on their first home. These statistics make for dismal reading, however, on the Isle of Man, this needn’t be the case.

Lloyds TSB managing director Stephen Noakes said the research showed that first-time sellers are facing tough challenges.

He said: “It is vital that this group of home movers receive more support and attention, as they play an intrinsic role in getting the housing market moving again.

“To achieve a sustainable housing market we need to see movement throughout the market. If second steppers get stuck on the first rung, movement at the bottom half of the ladder comes to a standstill and this bottleneck will not only restrict the supply of starter properties but will have a knock-on effect across the whole of the housing market.”

The Rightmove report says that second-time buyers are a neglected and important part of the property market, and that aged typically 41, they are weighed down by worries over space, age and kids.

Rightmove director Miles Shipside said: “Second steppers are the ugly ducklings of the housing market.”

In the UK it does not look as though second steppers will find life much easier in the foreseeable future with house prices looking as though they may be creeping back up.

Here on the Isle of Man we have a strong underlying demand for quality first (and second) time housing and, if you believe what you hear, a waiting list of over 500 for affordable, first time buyer housing. So what is the hold up? It’s all to do with market prices, lending criteria and, crucially, the structure of the Isle of Man Government House Purchase Assistance Scheme (HPA Scheme) and the maximum threshold it has set for financial assistance. We know that the banks are lending. In fact we know that some of these banks will lend up to 90% loan to value (LTV). We also know that through the HPA Scheme qualifying individuals can receive lump sum assistance on properties up to a maximum of £150,000. The trouble seems to be that a good quality home, one with enough space to swing the proverbial cat, is worth more than this figure in our resilient and somewhat dogged property market. That’s not the fault of estate agents forcing up prices; contrary to popular belief, we don’t do that – it simply isn’t in our best interests. At this level it’s also not the fault of vendors setting artificial asking prices in the hope that they’ll secure top dollar. If this was true, then there wouldn’t be a housing market at all as no one would sell anything! It’s the market we’re operating in so rather than sit back and wait for it to correct itself and for prices to fall our advice is to accept it and, if you are considering that rite of passage onto the property ladder, then here are a couple of essential tips to help you along the way;

1.      Work out what you can afford

The most important step is working out how much you can afford – use Black Grace Cowley’s ‘mortgage calculator’ to get a realistic picture of what your prospective mortgage might cost. Check out this tool on our website and see how it can work for you!

Make sure you clearly set out your budget so you can get a clear understanding of your finances and identify where you might have to cut back. Looking in detail now about all your outgoings will make taking on such a serious financial commitment far less worrisome and stressful in the long term.

2.      Getting the money!

Ask several mortgage lenders what they are prepared to lend you, asking for an ‘Agreement in Principle’ wherever possible. This will help lend weight to your case when you wish to commit to buy a property. First time buyers aren’t, generally, subject to long chains so when all your ducks are in a row, you are a very attractive purchaser to would-be sellers!

The deposit is key; what you can borrow (and therefore afford) depends on how much you have to put down. Typically buyers in the Isle of Man need between 5-15% of the purchase price to get a mortgage in the current climate.

If you find you are having difficulties, why not ask one of our residential sales guys for an introduction to an independent financial advisor who can guide you through the process step by step.

Call into our office(s) on:

51 Victoria Street, Douglas 645555 or 9 Atholl Place, Peel 845696