First-time buyers 'don't understand legal terms'
Published On 7 June 2007
Many young home buyers - even after securing a mortgage - are in the dark about the terms surrounding property negotiations.A new report from AA Legal Services found that 40 per cent of first-time buyers could not correctly explain the difference between a leasehold and freehold property.
With the Bank of England's Monetary Policy Committee due to meet today (June 7th), the AA has warned that people may not understand what type of property they are set to purchase with their mortgage.
Young home buyers will typically have to spend £159,653 on their first home - often taking on a large mortgage to afford it - but just 59 per cent knew what a freehold was and 43 per cent were ignorant of what buying a leasehold property would mean for them.
A worrying two per cent of people aged between 18 and 24 believed you could only buy a freehold property if you were a member of the Freemasons.
"Our research suggests that many homebuyers are so desperate to get onto the property ladder that they may be over-looking vitally important basic legal principals," warned James Molloy, the head of AA Legal Services.
"For years, the legal community has not helped much in terms of engaging the public on legal aspects of home buying."
Recent figures from the Council of Mortgage Lenders suggest that first-time buyers spend 18.3 per cent of their income servicing the interest on their mortgage.
