Buying a new home can be a complicated business with plenty of confusing jargon.
New research has found that Londoners are especially in the dark when it comes to understanding the processes and the terminology involved.
Zoopla has revealed that 21 per cent of those in the capital don’t feel confident in their property buying knowledge.
And of those, 28 per cent said this lack of understanding had even prevented them from buying a home.
The Property Knowledge Gap
The research revealed the capital’s clear confusion with many every day terms used in a property purchase, proof that getting on the ladder is something many Londoners can’t even contemplate.
Amazingly, 30 per cent couldn’t accurately define what a mortgage is, compared to 20 per cent nationally.
When questioned about stamp duty, Londoners performed the worst of all regions, with 43 per cent answering incorrectly or unable to answer.
More than half didn’t know what stamp duty is, but this was compared to an average of 73 per cent nationally.
In fact, stamp duty seems to be a particularly confusing element in the home-buying process; a fifth of UK adults (18 per cent) incorrectly believe you can’t avoid paying it, when, in England, it only applies to homes worth over £250,000, rising to £425,000 for first time buyers paying up to £625,000.
When questioned about which property-buying-related terms they were secure with, 47 per cent of those in the capital cited ‘fixed rate interest’ (this was 61 per cent across the country); 39 per cent were confident on ‘surveying’ (the UK average was 53 per cent) and 33 per cent could describe ‘completing’ (46 per cent nationally).
Shared ownership isn’t shared understanding
Of the more nuanced terminology, Londoners yet again scored below the national average; only 7 per cent could define ‘gazundering’ (in contrast to 10 per cent nationally); 17 per cent knew what ‘disbursements’ were (compared to a UK average of 15 per cent) and 15 per cent of Londoners could outline the meaning of a ‘covenant’ (17 per cent across the UK).While the lion’s share of shared ownership properties are in London, only 29 per cent of Londoners feel confident talking about what this scheme involves compared to 37 per cent nationally.
“With the average deposit Londoners need to secure their first home hitting £144,000 and growing, it's no surprise that those living in the capital have the largest property knowledge gap of any region.”
And, in data that must concern a government trying to encourage first time buyers to buy, other buyer schemes, such as the Mortgage Guarantee Scheme and Lifetime ISAs, were as much of a mystery.
In the UK, a whopping 90 per cent couldn’t confidently describe over half the schemes listed. The only question where Londoners scored higher than the national average was in defining the term ‘buying schemes’; 22 per cent knew this, in contrast to 17 per cent for the rest of the country.
With such a stark knowledge gap, it’s unsurprising that 88 per cent of Londoners who’ve bought a house found the processes and terminology hard to understand.
Parental Property-Owning Bias
Both in London and nationally, whether someone’s parent owns a property played a pivotal role in their knowledge.
Those whose parents weren’t homeowners were twice as likely to admit they didn’t know the meaning of ‘fixed rate mortgage’ (14 per cent) than those whose parents were homeowners (6 per cent).
And, showing how inequality is passed down through the generations, UK adults are a third more likely to own a property if their parents do (73 per cent) than if they don’t (55 per cent).
“With the average deposit Londoners need to secure their first home hitting £144,000 and growing, it's no surprise that those living in the capital have the largest property knowledge gap of any region, as the idea of owning a home perhaps feels further out of reach for them,” said Daniel Copley, Consumer Expert at Zoopla.
“The reality is that the property market can move fast so potential movers of any age should brush up on their knowledge.”
Glossary — in case you need it!
- Stamp Duty: Tax you pay when you buy a property
- Fixed Rate Mortgage: When the interest rate remains the same over an agreed period
- Surveying: The professional practice of checking a property over before a sale is completed
- Gazundering: When a buyer lowers their offer at the last minute
- Gazumping: When another buyer comes in at the last minute with a higher offer
- Exchange: When both parties swap and sign contracts and the buyer pays their deposit
- Completion: The final legal step in buying a property, when it’s transferred to the buyer
- Buying Scheme: Schemes that help buyers purchase a property, especially first time buyers
- Disbursements: Fees solicitors pay to a third party in order to complete the buying process
- Covenant: A promise or limitation contained in a property’s deed which affects its use
