Help for first time buyers

Thursday 21st October 2021

With property prices now at a record high, there are several schemes available to assist first-time buyers onto the property ladder, who may otherwise struggle to buy their own home.

First Homes Scheme

The government have introduced a scheme called First Homes, they define these as ‘a specific kind of discounted market sale housing’ whereby, a number of new-build homes will be sold with at least a 30% discount off their open market valuation, these should account for at least 25% of all affordable housing units delivered by developers through planning obligations.

Buyers should check whether the builder is offering the scheme for plots on the development, and if so, an application can be made which is subject to eligibility criteria.

Shared Ownership

Shared ownership homes are available to first time buyers and existing homeowners or where you have previously owned your own home.

Shared ownership properties are always leasehold properties.

It is a scheme whereby you buy a share of the property which is usually between 25% and 75% then you pay reduced rent on the share that you don’t own.

Once you own the home, you can then apply to buy additional shares in the home which is called ‘staircasing’. If you staircase to 100% you become an outright owner, and you will no longer need to pay rent.

Some shared ownership properties are capped at a maximum of 80% share, these are usually where the property falls within a designated protected area. Your legal representative would need to check there are no restrictions limiting the staircasing if your intention is to buy additional shares.

The Mortgage Guarantee Scheme

This scheme offers 95% mortgages and is open until 31 December 2022.

The scheme is subject to eligibility criteria and encourages lenders to offer mortgages to buyers who have a 5% deposit by guaranteeing a portion of the 95% mortgage to reduce the risk to lenders.

Help to Buy Equity Loans

These are offered on new-build properties for first-time buyers. They cover up to 20% of the purchase price or 40% in London. There is a requirement for buyers to contribute 80% of the value of the home with a minimum of 5% deposit and up to 75% mortgage. In London the contribution in at least 60%.

The new scheme runs until March 2023 and the builder must be registered with the Help to Buy.

This cannot be used in conjunction with the ‘First Home’ scheme.