Government schemes for first time buyers and existing homeowners

Support is available for first time buyers or for those returning to the property market but unable to meet the cost of an open market property. We outline the Government schemes.

Statistics show that UK house prices have increased by 23% over the last decade. Despite economic uncertainty, they show no sign of slowing down. It is undoubtedly getting harder to get onto the property ladder, particularly because many potential first time buyers and those who have previously left the housing ladder are spending so much of their monthly income on rent.

Fortunately, there are a number of Government schemes to assist first time buyers, existing homeowners or those wishing to return to the property market, which can help reduce the cost of buying your home.

Shared ownership schemes

A shared ownership scheme allows you to buy between a 25% and 75% of the equity of a property. Housing Associations will usually agree to accept a 5% deposit on exchange. You then have the option to buy a bigger share in the property at a later date.

You can purchase a home through the shared ownership scheme if you are a first time buyer, you used to own a home but cannot afford to buy one now, or if you own an existing shared ownership property but are looking to move.

Discounted purchase price/S106

If you qualify for this scheme, you will be offered the property at a discounted purchase price. The developer sells the home on a freehold or, in the case of apartments, a long-leasehold basis. The obligation (and that of subsequent owners) to sell the home at the discounted price to qualifying persons will be set out in the s106 planning agreement and will usually bind the property in perpetuity.

The Government Help to Buy shared equity scheme

The Help to Buy equity loan scheme is currently set to run until 2020. If you are eligible for the Help to Buy scheme, the Government will lend you 20% of the equity in the property (or 40% if you are buying a property in London). This will be secured behind your principle loan interest free for five years – you are only required to offer a 5% deposit on exchange of contracts.

It is available to first time buyers as well as homeowners looking to move- but only for newly built homes.

Help to Buy ISAs

A Help to Buy ISA is a useful tool if you’re a first-time buyer saving for a mortgage deposit. You can earn up to 2.58% interest tax-free and then the state will add 25% free cash, up to £3,000 depending on how much you have saved in your ISA.

If you want a Help to Buy ISA, you need to open it by 30 November 2019. Be aware however that the bonus itself, once claimed, can ONLY be used towards the completion amount and not the deposit.

Coodes Solicitors is registered as a member of the Hep to Buy ISA scheme, so talk to us if you are interested and we can help you to access the scheme.

For more information, contact the Residential Property team on 01872 246200 or email info@coodes.co.uk