Changes to housing policies and first time buyer schemes in 2021

Updates about Shared Ownership, Help to Buy, First Homes Discount and Stamp Duty

Despite building delays and restrictions to property viewings caused by COVID-19 over the last year, thousands of budding buyers are still eager to take their first step onto the property ladder.

A new year can encourage change in the way we do things, and 2021 is no different. There are numerous changes coming to the housing market in the coming months, so we’ve rounded up what you need to know about updates to affordable housing schemes and your home-buying options in 2021.

Changes to Shared Ownership

Shared Ownership aims to help first time buyers and those who cannot afford to buy a home on the open market get on the property ladder.

The part-buy part-rent scheme allows buyers to purchase a share of a property – usually between 25% and 75% – paying a mortgage on the share they own, and a below-market-value rent on the remainder.

In September 2020, Housing Secretary Robert Jenrick announced the Affordable Homes Programme, which aims to give a £12 billion boost to the housing sector and up to 180,000 new homes across the country. Within this plan, a new model for Shared Ownership had been outlined which is set to help more people find a home to call their own.

Whilst decisions are still being finalised, it is expected that potential changes will occur in 2021. The updated scheme aims to lower the minimum share that buyers are able to purchase from 25% to 10%, overall reducing the deposit amount required. Alongside this, the new model will allow current property owners to buy more shares of their home – a process known as staircasing – in smaller increments of just 1%.

For more information about other potential changes to the scheme – including extended repair warranties and ‘A Right to Shared Ownership’ on new rental homes – please visit our blog.

Changes to Help to Buy

Help to Buy is a home ownership scheme which helps first time buyers onto the property ladder in England by providing an equity loan of 20% (or 40% for homes within Greater London), which means a potential buyer only needs to raise a 5% deposit with a 75% (or 55%) mortgage making up the rest.

After a brief extension of the current scheme due to building delays caused by COVID-19, Homes England recently announced that applications are now open for the updated Help to Buy scheme, which will be available from April 2021 until 2023.

Whilst the equity loan is currently available to all buyers who do not own a home, the new model will only be available to first time buyers – this means that individuals cannot already own, or have owned previously, a property in the UK or abroad. Alongside this, regional price caps will be introduced, meaning that buyers will only be able to use the initiative to purchase a home costing no more than 1.5 times the average first time buyer property price in their region.

For more information about the upcoming changes to Help to Buy – including eligibility criteria, the application process and a full breakdown of the regional price caps – check out our blog.

First Homes Discount

The First Homes Discount scheme will allow first time buyers across England to get onto the property ladder at a discounted rate. Buyers will be able to purchase a new build home with a 30% discount on the full market value of the property – meaning they could save an average of around £100,000.

Buyers must purchase a home in their local area, and priority will be given to military veterans and key workers such as nurses, police officers, firefighters and teachers.

While the government published a summary from their First Homes consultation back in August 2020, there is still no set launch date for the scheme. Visit our First Homes explainer page for more information.

Changes to Stamp Duty Land Tax

Back in July 2020, a temporary ‘Stamp Duty holiday’ was announced on the first £500,000 of all homes bought across England.

Initially introduced to help boost the property market and aid budding buyers in the aftermath of the first lockdown, this pause is due to end in March 2021 which will mean that thousands of buyers will once again need to factor Stamp Duty Land Tax into the costs of buying their home.

However, even after the holiday has ended, a first time buyer relief will still be available on SDLT, with buyers paying no Stamp Duty on residential properties worth £300,000 or less. For those buying a home between £300,000 and £500,000, the purchaser will pay SDLT at 5% on the amount of the purchase price in excess of £300,000.

Get on the property ladder in 2021

Alongside understanding how affordable housing schemes will be changing this year, there are plenty of other things to do to get you started on your home-buying journey!

From talking about your mortgage options with a specialist broker to selecting a solicitor to handle all of the legal aspects of buying your first home, Share to Buy offers a wealth of information that can help to ease the home-buying process!

If you have any questions about the buying process, the different types of housing schemes available or any of the services we offer, please reach out to us on our social media channels at @SharetoBuy on Twitter, Facebook and Instagram and we will be happy to help!