Fixer-uppers helping first-time buyers get onto property ladder: Nationwide

New research from Nationwide has found that first-time buyers are increasingly opting for cheaper properties needing renovation to get onto the property ladder.

The poll of 2,000 first-time buyers found that two-thirds (66%) bought a cheaper home because it required DIY or renovation work, with 19% saying it was significantly cheaper.

Regionally, that was most likely to happen in the North East and least likely in Scotland. For many, choosing a ‘fixer-upper’ was a strategic decision rather than a compromise.

The research, conducted by Nationwide as part of a focus on its support for first-time buyers, suggests that buying a ‘fixer-upper’ meant that aspiring 41% of homeowners could buy in the location they wanted, 30% could shape the home to their own tastes over time. 23% could increase the value of the property, and 22% could prepare the home for future plans, such as starting a family.

DIY and renovation have become almost universal among first-time buyers, with 93% completing at least one project since moving in, and 34% saying they have carried out many projects.

Three-quarters said they carried out more DIY or renovation than they initially anticipated, and a quarter of those said they had done much more than they expected, with 18% taking on major structural projects.

This was most prevalent in the North West, with 83% saying they had done more than expected, compared to just 68% in Northern Ireland and the South East.

Despite this, enthusiasm remains high. Nearly nine in ten first-time buyers describe themselves as confident, excited or willing to take on DIY, while one in five also admitted they specifically chose a property that needed work doing to it because they enjoy DIY and renovation projects.

Nevertheless, the extra work comes at a cost. Six in ten first-time buyers have spent more than £2,500 on DIY and home improvement projects since moving in, with 29 per cent spending over £5,000. The most common projects include painting and decorating, kitchen and bathroom improvements, new flooring and general repairs, while 18% have taken on larger structural projects, such as knocking through walls, building extensions or converting lofts.

Nationwide’s 'What Adds Value House Price Index' report shows that bigger renovation projects can deliver significant long-term financial benefits. Adding a loft conversion or extension with a large double bedroom and bathroom can increase the value of a typical three-bedroom home by up to 24%, reinforcing the appeal of buying a cheaper property that needs work.

Many first-time buyers are planning for these extra costs. Nearly two-thirds factored DIY or renovation expenses into their savings when building their deposit, and more than a fifth borrowed more on their mortgage so they could keep savings back to fund improvements after moving in.

Carlo Pileggi, head of mortgage products at Nationwide, said: "For many first-time buyers, opting for a cheaper property that needs work is a deliberate and savvy choice rather than a compromise. By taking on a home requiring renovation, they are not only able to get onto the property ladder in the location they want, but they can shape it to their own taste while adding to its value.

"Although there’s a real enthusiasm amongst first-time buyers to roll up their sleeves, our research suggests many have had to undertake more work than they initially intended. This is where planning and having the right support can make a real difference. Nationwide’s Helping Hand offers eligible buyers the opportunity to borrow more, helping them plan renovation costs and feel more in control as they turn a fixer-upper into the home of their own."