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Last edited 10 Sep 2018
Help to buy
This article was created in January 2015. Some of the figures quoted may be subject to change.
There are four types of Help to Buy scheme:
The following criteria apply:
- A deposit of 5% of the property price is required.
- The government can loan up to 20% of the price.
- The remaining 75% is covered by a mortgage.
The homeowner must pay back the loan after 25 years or when the home is sold, whichever is earliest. The amount that needs to be paid back is determined by the market value at that time. The loan can be paid back in part or in full at any time.
In September 2016, the Chancellor confirmed that the Mortgage Guarantee Scheme would close to new loans on 31 December 2016 (ref. gov.uk Help to Buy helps over 185,000 people buy a new home, 29 September 2016). It had been widely criticised for inflating the housing market.
Under the scheme, the government provided a guarantee to a mortgage lender, to help individual’s with a deposit of 5% to purchase a home. The guarantee was open to both first-time buyers and others moving to a new home (new build and older), with a purchase price of up to £600,000.
In order to qualify, the home must:
- Have had a purchase price of up to £600,000.
- Not have been a shared ownership or shared equity purchase.
- Not have been a second home.
- Not have been rented out after it is purchased.
Housing associations provide shared ownership schemes where it is possible to purchase a share (between 25% to 75%) of a property. A mortgage is required for the share that is purchased, and rent is paid on the remainder.
- The household earns £60,000 or less, unless the property is in London where the maximum is £66,000 for a 1 or 2 bedroom or £80,000 for a three or more bedroom property.
- The individual is a first-time buyer (or no longer can afford to buy one).
- The individual rents a council or housing association property.
- You are less than 55 (see below if over 55).
The ‘Older People’s Shared Ownership’ assists individual’s of 55 and over and is similar to the general scheme but it is only possible to buy up to 75% of the property. Once 75% of the home is paid off, rent is paid on the remaining amount.
If the property is owned entirely by an individual, they may sell it and the housing association has the first chance to purchase the property for the first 21 years after the house is purchased. If only a share of the property is owned by an individual, the housing association can find a buyer.
The Help to Buy NewBuy scheme is for new homes and for individual’s with a deposit of 5%.
It is possible to purchase a property with the NewBuy scheme if the new home meets the following criteria:
- A new build.
- A maximum property value of £500,000.
- It is the main home.
- It is owned by the individual.
- IT is constructed by a scheme builder.
 January 2018
The statistics released show:
- Over 350,000 completions have taken place using one or more of the Help to Buy schemes.
- Over 300,000 first-time buyer households are now on the housing ladder thanks to Help to Buy.
- Over 93% of completions across the Help to Buy schemes have taken place outside of London.
 September 2018
The report states that 170,000 homes were purchased through the scheme between its introduction in April 2013 and March 2018, of which more than 80% were first-time buyers. It also suggests that housing supply has increased by 74% since its launch, and that the value of the government's equity loan book has increased - the Treasury investment of £8.9bn over the first five years could now be worth £9.8bn.
HBF chairman Stewart Baseley said, “...it is quite clear that the Help to Buy scheme has been an unmitigated success and has delivered handsomely on all its objectives."
 Find out more
 Related articles on Designing Buildings Wiki
- Affordable housing.
- Affordable rented housing.
- Buy to leave.
- Buy-to-let mortgage.
- Consumer Code for Home Builders.
- Fixing our broken housing market.
- Housing associations.
- Housing tenure.
- Intermediate housing.
- Real Estate Investment Trusts.
- Rent to buy.
- Right to buy.
- Right to rent.
- Section 106 agreements.
- Shared equity / Partnership mortgage.
- Shared ownership.
- Social housing.
- Social rented housing.
- What is a mortgage?
 External references
- For more information visit http://www.helptobuy.org.uk/.
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