Help to buy

[edit] Introduction

The government created the Help to Buy scheme to enable first-time buyers to get onto the property ladder and to support those moving up the property ladder.

There are four types of Help to Buy scheme:

• Equity loans.
• Mortgage guarantees.
• Shared ownership.
• NewBuy.

[edit] Equity loans

Equity loans are available to first-time buyers and others moving to new-build homes in England, with a purchase price of up to a defined threshold.

A deposit is requried, and 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.

Applicants should contact a Help to Buy agent. The property must be bought from a registered Help to Buy builder.

[edit] Mortgage guarantees

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.

The scheme could not be used with interest-only mortgages or with any other publicly-funded mortgage schemes.

[edit] Shared ownership

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.

Once a house is purchased, it is possible to buy additional shares. The price of the new shares will reflect the current value of the property.

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.

It is possible to contact a local agent in the area to find out more about shared ownership schemes.

[edit] NewBuy

The Help to Buy NewBuy scheme is for new homes and for individual’s with a deposit of 5%. The individual must be a UK citizen or have the right to remain in the UK indefinitely.

It is possible to apply for a mortgage up to 95% of the purchase price, from an approved lender. NewBuy homes can be located within an area from the NewBuy website.

[edit] Updates

[edit] January 2018

Statistics released on 11th January 2018, show that over 350,000 people across the UK have now used the government’s Help to Buy schemes to help purchase their own home.

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.

[edit] September 2018

In September 2018, amidst reports that the government is considering the merits of continuing the help to buy scheme, the Home Buyers Federation (HBF) published a report highlighting its benefits.

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."

Ref https://www.hbf.co.uk/news/help-buy-unmitigated-success/

[edit] 2020

In February 2020, the government announced further details about the new Help to Buy scheme that will run from 2021 to 2023. This scheme will be more targeted at those who need help onto property ladder and will include new quality measures to improve consumer experience and safety. This was announced alongside the creation of a New Homes Ombudsman. Ref https://www.gov.uk/government/news/housing-secretary-clamps-down-on-shoddy-housebuilders

In July 2020, the government announced an extension of the completion date for eligible homes from December 2020 to 28 February 2021. Ref https://www.gov.uk/government/news/help-to-buy-scheme-extended

[edit] Related articles on Designing Buildings

• Affordable housing.
• Affordable rented housing.
• Buy to leave.
• Buy-to-let mortgage.
• Consumer Code for Home Builders.
• Fixing our broken housing market.
• Help to build.
• Housing associations.
• Housing tenure.
• Intermediate housing.
• New Homes Ombudsman.
• 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?