PCS Legal: The Help to Buy scheme is ending – what’s next?

Expert conveyancers discuss Shared Ownership, First Homes, Deposit Unlock and more!

The Help to Buy: Equity Loan scheme runs until March 31st, 2023. There are no current plans to extend or replace the Help to Buy: Equity Loan Scheme by the current government.

The scheme has been hugely popular for thousands of buyers across England and Wales, enabling them to purchase a property with only a 5% deposit.

Due to the success of the scheme how does this now impact the current housing market for first time buyers now that this is ending? Are there any new schemes in the making? Will there be any changes to current schemes?

Existing schemes are already in place to help first time buyers, we expect there to be a natural increase in demand of these going forward.

We are also now seeing many new schemes enter the market however, what do the schemes involve and how much will they help with you making steps onto the property ladder?

Shared Ownership

Shared Ownership has been around for the longest of all new and existing schemes and certainly stands the test of time. With Shared Ownership this provides first time buyers the opportunity to purchase a share of a property ranging from 10% up to 75% of the properties full market value.

Usually only a 5% deposit is required appealing to many first time buyers. Another benefit that applies to Shared Ownership properties is that these aren’t just restricted to new builds. There are also many second-hand properties available to purchase under Shared Ownership.

First Homes Discount

First time buyers may now be eligible to purchase their first home for 30% to 50% less than its market value. The property can be a new home built by a participating developer, or a home you buy from someone else who originally bought it as part of the scheme.

It is likely the local authority providing these discounted homes will prioritise buyers who are essential workers, people who already live in the area, and those on lower incomes.

You can look for new homes in your area that are advertised by developers as part of the First Homes Discount scheme.

Developers offer these homes to first-time buyers with 30% to 50% of the market value taken off the price.

The homes cannot cost more than £420,000 in London, or £250,000 anywhere else in England, after the discount has been applied.

You can only sell the home to someone who is eligible to buy a First Home. You must give them the same percentage discount that you received, based on the home’s market value at the time of sale.

Deposit Unlock

A new scheme to the market that offers first time buyers and existing home owners to buy a new build home with just a 5% deposit is the Deposit Unlock scheme.

Mortgage lenders are often stricter on the amount they are willing to lend on the purchase of new builds. This is to protect themselves from the inevitable devaluation of the property in the early years and other risk factors. As such, they often set the minimum deposit for new build properties at 15% or sometimes even 25%.

The Deposit Unlock scheme gets around that and allows you to buy a new build property with just a 5% deposit. With the Deposit Unlock scheme, the house builders pay to insure the mortgages instead and they use some of the money from selling the homes for this purpose; the aim is to make lenders more comfortable about offering high Loan to Value mortgages on new builds.

This scheme is exclusively for new build homes and the maximum loan you can take out to buy a property through the Deposit Unlock scheme is currently £750,000. Although, this depends on the lender and your circumstances.

Forces Help to Buy

The Forces Help to Buy (FHTB) scheme was recently made permanent by the government. Under the scheme, service personnel can borrow up to 50% of their gross annual salary, up to a maximum of £25,000 to encourage and support homeownership.

The government announced the loan is interest free, repayable over a maximum of ten years, and is open to most regular personnel with more than 12 months’ service.

To check your eligibility for any of the above schemes it would be recommended you speak with a specialist financial advisor who has previous dealings with the same. They will be able to review your personal and financial details and advise what schemes are available to you.

More to come?

With the Help to Buy: Equity Loan freshly coming to an end this month, it is likely, over the course of the year, we will see more schemes and options becoming available to first time buyers.

When purchasing a property, it is important to instruct a financial advisor and conveyancer that has specialist knowledge of the above schemes and an up to date comprehension of their requirements.

The Share to Buy website provides recommendations on financial advisors and conveyancers with experience in this field, on top of the latest news and events surrounding the property market.

Visit Share to Buy’s Shared Ownership Solicitors and Conveyancing Panel.

Get in touch with PCS Legal today!

Share to Buy is a one stop shop for affordable homes. On our website, you can search for properties, compare mortgages and find out all you need to know about alternative home buying schemes such as Shared Ownership via our article index.