Interesting question, isn’t it? It’s one of those questions which we think we ought to know the answer to but don’t always have the whole picture.
Last time this, apparently simple, definition of first time buyers sparked a big discussion was in 2010 when the Government announced a stamp duty break for first-time buyers and home buyers were desperate to prove that’s what they were. There are no such initiatives I am aware of at the moment but it shows the importance of accurate definitions.
So, in case you are considering buying a property for the first time or know someone who does, take a look at our helpful definitions summary. After all, you never know when a new Government incentive may come in:
As always there are a few versions to consider here:
The mortgage industry’s definition of a first-time buyer is a pretty loose one. The Council of Mortgage Lenders classes a first-time buyer simply as someone buying a property who doesn’t already own one. Clearly, this is a pretty wide interpretation, since it includes people who previously owned a place, sold to rent for a while and are now re-entering the mortgage market.
In other words, anyone getting a mortgage who isn’t a home mover, homeowner, buy-to-let investor or simply re-mortgaging is classed as a first-time buyer. This means that estimates of the number of first-time buyers are generally higher than the number of ‘pure’ first-time buyers in the market.
At the other end of the spectrum the Government’s definition of a first-time buyer is much stricter; To qualify for the tax-free perk you must have never owned a property… ever. This includes anywhere in the world, shared ownership properties with housing associations, properties jointly owned with someone else at some point in your past and even caravans. It also needs to be a property you are buying as your own main residence, not a buy-to-let or second home.
Complicated? Here are a few examples:
I’m buying jointly with my partner. All the buyers, when there are more than one, must be first-timers.
Many years ago, I bought a house jointly with my wife. We divorced a long time ago and I’m now with a new partner, who has never owned before. Can I/we be treated as a first-time buyer? As you have been involved in buying a home in the past, you won’t class as a first-time buyer but your new partner might if they meet the criteria.
What about someone previously in shared ownership as they never bought outright? People who own a property through shared ownership are not considered first-time buyers.
If you are considering getting on the property ladder it might be helpful to speak to a mortgage broker. At Spot on Mortgages, we don’t charge a fee for our advice so get in touch with us to review your option further.
Your property may be repossessed if you do not keep up repayments on your mortgage.