UK: The £3 billion front door

First-time buyers are being hit by an inflationary double whammy – after years of rising property prices, new research out today reveals the nation’s new property owners are forking out almost £3 billion* just to move into their first home.

The extra expense of almost £6,000 per buyer on items such as legal bills, tax, removals and basic furnishings comes as a surprise to most first-time buyers. In fact, almost nine in 10 admit they underestimate the amount needed to cover costs on top of the actual property price.

Norwich Union’s study amongst almost 900 first-time buyers reveals that while 94 per cent set a strict budget when embarking on the hunt for their first home, a quarter end up going over budget – with the average overspend being more than £10,000.

But this doesn’t come as a surprise to the nation’s estate agents. The insurer spoke to 250 estate agents and eight out of 10 said that first timers always underestimate the costs associated with buying a property.

And a quarter of all agents admit dealing with first time buyers is frustrating and time consuming.

Phil Spencer, expert house finder and presenter of Channel Four’s Location, Location, Location, says it’s not unusual for new buyers to dwell on property prices and neglect these hidden extras.

“It’s easy for them to get fixated on property prices and overlook the cost of moving in. And yet, as the survey shows, these costs are often high and first-time buyers may end up having to borrow even more money on top of their mortgage.

“It pays to be prepared and well organised and I always encourage new buyers to consider every expense, investigate the various costs and set their budgets accordingly.”

The Norwich Union study also reveals house hunters often have a reality check when they start house hunting – almost half of them had to lower their expectations once they starting looking and realised the real cost of property.

But it seems that once they’ve seen their dream home, it takes just minutes for first time buyers to decide that it’s ‘the one’ – half make up their mind in under five minutes of walking through the front door.

To help people getting on the property ladder, Norwich Union has launched the insurance industry’s first home package tailored to meet the needs of first time buyers.

Norwich Union’s product feature include a low start contents sum insured, a fixed price** for the first two years and a number of money saving offers from leading home suppliers.

Jill Willis, market development manager at Norwich Union, said: “Buying a home for the first time can be quite a daunting and expensive time. There are all sorts of things to do and remember and choices to be made.

“As our research shows, people are often on a very tight budget – or in fact over-spending. We’ve worked hard to take some of the hassle away from first time buyers by developing this all-round package, which not only provides insurance but also gives a whole host of other benefits with cost saving and simplicity in mind.”

And to help first-time buyers, Norwich Union has teamed up with Phil Spencer, expert house finder and presenter of Channel Four’s Location, Location, Location to produce the top 10 tips for first- time buyers.

1. Sort out your finances. Find out how much you can borrow, get a mortgage offer in writing and find a solicitor to do the conveyancing - get one who isn’t overworked
2. Write a search brief. List your ‘must haves’ and be as specific as possible. List the bonuses and no-nos. This will keep you focused and stop you falling in love with other people’s lifestyles
3. Use the Internet for initial property research. Most agents have their own sites
4. Visit a few estate agents in a couple of locations and ask their advice. Explain you’re on a search-mission only and talk to them about your needs - budget, space, where you work, preferred schools, leisure pursuits.
5. Prepare a ‘Buyer’s Pack’. This shows you’re serious and can proceed speedily. This should include a mortgage offer, evidence of the deposit you have available, solicitor’s details and all your contact numbers.
6. Phone weekly. Don’t wait for details in the post, make weekly calls to your agents to find out about new instructions.
7. Begin viewing. Once satisfied a property fits your search brief, begin viewing and make sure you turn up on time.
8. View carefully and take notes of the layout and size. Consider how rooms might be changed - remember only two things can’t be changed - location and light. Have a second view at a different time of day, preferably at night
9. Decision time. If you want to buy, make an offer in writing. If you think the asking price is high, start negotiations with a lower ‘shot across the bow’ offer
10. Do not let go. To ward off gazumpers and make vendors feel morally bound to proceed, hassle your mortgage company to arrange the survey and communicate regularly with solicitors and estate agents

For more details customers should contact Norwich Union Direct on 0800 888 222 or visit the website at www.norwichunion.com/firsttimebuyer

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Media contacts:
Jo Misson and Matthew Buchanan at QBO Bell Pottinger on 020 7861 2424 or Liz Kennett and Lucy Haughey at Norwich Union Press Office on 01603 688263 or 07801 901 666

Notes to editors:

• Norwich Union commissioned Brand & Issues to research 250 estate agents in July 2003. The insurer also commissioned You Gov to research 884 adults who had bought their first home in the past three years.

  * Based on average spend of £5,919 per first time buyer and 0.5 million first time buyers in 2002. Full calculation is £2.95 billion – using American billion (1,000 million)
  ** Fixed price for two years if you don’t make a claim, move house or ask us to increase your cover

• Eligibility criteria for a first time buyer quotation are those who are in the process of buying or who have bought their first home within the last 18 months
• Norwich Union is the UK’s largest insurer with a market share of around 16 per cent and is more than 1.5 times the size of its nearest rival. It is also the largest personal lines insurer.
• It has a focus on insurance for individuals and small businesses. It insures:
  • one in five households
  • one in five motor vehicles
  • more than 700,000 businesses
• Norwich Union products are available through a variety of distribution channels including brokers, corporate partners such as banks and building societies and Norwich Union Direct.
• Norwich Union’s news releases and a selection of images are available on the Aviva internet press centre at www.aviva.com/media
• An ISDN facility is available for studio quality broadcast. Call the press office on 08703 66 68 68

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