In recent years many people have benefitted from the Government’s Help-to-Buy scheme, which offers first-time buyers the chance to take out an equity loan towards their new home. With more than 328,506 buyers taking advantage of the equity loan scheme since its launch in 2013, Help-to-Buy has enabled many people to take those first steps on the property ladder. However this scheme is coming to an end and buyers don’t have long left to complete on a Help-to-Buy property.
Read on to find out when the Help–to-Buy scheme is ending and the alternative schemes available to support first-time buyers.
What is Help-to-Buy?
The Government’s Help-to-Buy scheme aims to help first-time buyers who have a deposit of at least 5% to buy a new build home. The Government will lend eligible buyers up to 20% (up to 40% in London) of the value of the home via an equity loan, the buyer will then only need to secure a mortgage for 75% of the property’s value.
When is Help-to-Buy ending?
The current Help-to-Buy scheme is planned to end in March 2023. However there are a number of deadlines within this:
- Buyers must have completed their application for Help-to-Buy by of the 31st October 2022
- Construction of the property must be signed off by the 31st December 2022
- The legal completion of the purchase has to be fulfilled by the 31st March 2023.
Who is eligible for the Help-to-Buy scheme?
You must be a first-time buyer over the age of 18. This means that you cannot already own, or have previously owned a property or residential land in the UK or abroad. If you are buying a property with another person, you must both meet the Help-to-Buy criteria to benefit from the scheme. While there is no minimum or maximum income brackets, you must be able to fund at least 80% of the purchase through a combination of deposit and mortgage.
How did the Help-to-Buy scheme change in 2021?
Before the scheme changed in 2021, Help-to-Buy was previously made available to all buyers wanting to purchase a new build property. However, the revised equity loan is now only available to first-time buyers. The government decided to introduce this change to ensure the scheme is assisting those who will benefit from it the most.
The new Help-to-Buy scheme also enforced regional price limits. This means that buyers can only purchase a home costing no more than 1.5 times the average first home property price in their region.
What are the regional price caps?
North East: £186,100
North West: £224,400
Yorkshire and the Humber: £228,100
East Midlands: £261,900
West Midlands: £255,600
East of England: £407,400
South East: £437,600
South West: £349,000
What happens if I can’t complete my purchase before the scheme ends?
If a buyer is unable to complete their purchase due to the property no longer being ineligible for Help-to-Buy funding then the contract will specify that the developer must return the buyer’s deposit and reservation fees.
Can I still use my Help-to-Buy ISA after March 2023?
Another source of help for first-time buyers has been the Help-to-Buy ISA, which closed to new applicants in November 2019. Existing account holders can still hold savings in their Help-to-Buy ISAs after March 2023 but must claim their 25% bonus (payable on completion of a first home purchase) by 1st December 2030.
What are some alternative schemes?
Shared Ownership – Shared Ownership allows buyers to purchase a share of a property and rent the remaining share from a landlord or housing association. As a part-owner, the buyer will only pay a mortgage for the part of the property they own, meaning they will also pay a lower deposit. Over time the buyer can increase their share of the property using an approach called ‘staircasing’.
First Homes – The First Homes scheme offers first-time buyers discount on their home with 30% to 50% off the full market value. The homes cannot cost more than £250,000 or £420,000 in London, after the discount has been applied. To apply for the First Homes scheme, the buyer’s annual household income must be below £90,000.
Where can I get further information on Help-to-Buy for my developments?
Just Mortgages New Build Specialists are professionally qualified Help-to-Buy and new build mortgage specialists.
There is also information available on the gov.uk website.
You can also search for a Help-to-Buy agent.