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The new Help to Buy scheme: what you need to know
| Author: Craig Bees | Published: 1st December 2020 10:54 |
Help to Buy scheme: good news for would-be homeowners
More good news for would-be homeowners with the news that from the middle of this month they will be able to apply for the new Help to Buy scheme.
Applications will be accepted from Wednesday December 16, the start date for the Government’s affordable housing scheme, which will run for two years from 1 April 1 next year (2021) until the end of March in 2023.
What is the scheme and what are the benefits?
First introduced in 2013, Help to Buy covers a range of programmes aimed at helping first time buyers purchase their first property, these include shared ownership and the Help To Buy Isa. Central to the scheme is the Help to Buy Equity Loan, which is what is being updated by the Government.
The new scheme sees the Government lend homebuyers up to 20% (40% in London) of the cost of a new home. Participants put down a deposit of at least 5% and must take out a repayment mortgage of greater than 25% to make up the difference.
For the first five years, the loan is interest free, after which interest starts at 1.75% and rises each year according to the Consumer Prices Index, plus an additional 2%. A monthly management fee of £1 is payable for the life of the equity loan. As previously, the scheme is restricted to only new homs and not resale properties.
Who is eligible?
Unlike before, only first time buyers qualify for a loan. The Help to Buy Equity Loan used to be available to those who had owned property before but did not at the time of applying. Even if you don’t live there, you must not have a financial interest in any other residential property to be eligible.
Applicants must also not have owned a home or residential land now or in the past in the UK or abroad. If you are married or in a civil partnership, your application will have to be a joint one with your spouse or civil partner.
Buy-to-let investors are not eligible and you will be penalised if, without written consent, you sub-let or rent the property out after you buy it.
This time around, the 2012-203 scheme has price caps set at 1.5 times the average first time buyer property price in each region in England. According to the Government, this aims to keep the prices of new homes closer to the average regional first-time buyer property prices, reducing the amount that first time buyers need to borrow.
The regional price cap for the East Midlands is £261,900
How do I apply?
Registered home builders advertise Help to Buy homes for sale on their developments.
Before you can apply for an equity loan, you must reserve your property and pay the fee, capped at £500. If you do not ultimately exchange contracts or turn out not to be eligible for Help to Buy, this fee will be refunded.
Help to Buy agents can help you to apply for an equity loan and will help you in ascertaining whether you can afford to repay it or if you’re eligible in the first place.
Government support for the scheme means buyers can afford to buy a property with a much smaller deposit than they would need on the open market. Previous to Covid 19 there were a range of 5% deposit mortgage deals available but the tightening of lending criteria by banks and building societies has severely reduced this pool of options.
In the first five years of the equity loan, repayments are kept lower by the fact interest is not payable. The quality of the new build properties available will be high, given homebuilders must comply with stricter quality standards than before.
Developers must agree to follow a Consumer Code for homebuilders, the Building Safety Charter and the New Homes Ombudsman. Homebuyers will also get a new home warranty before they complete their purchase and homebuilders must display their Home Builders Federation star ratings when they advertise homes.
The second lockdown is ending this week and, as things stand, we are able to continue working which is good news as our property enquiry levels remain high.
Rest assured that whatever Government measures are in the period leading up to the Christmas and New Year period we will continue to provide the best possible service for our customers.
We do ask that any vendor or tenant who has to self-isolate lets us know immediately by email to towcesterlettings@bartramandco.co.uk or towcestersales@bartramandco.co.uk. If you do not have email available please phone (01327) 359164 and leave a message.
Our online marketing and call/enquiry management systems will be maintained to ensure we continue to work as effectively as possible to minimise any potential disruption to the marketing of our clients’ properties.
Monthly draw: if you missed out on our November draw why not try again this month … and get an extra Christmas present. Your chance to win a case of Italian wines (red/whites/mixed) or one month’s membership at Whittlebury Hall Leisure Club.
How To Enter: every valuation and instruction for sale or rental between now and Tuesday December 22 will be entered, the winners being notified by e-mail.
If you’re thinking of selling or letting your property and want to win one of these great prizes call (01327) 359164 and speak to our sales or lettings team.
Until next time.
Craig Bees, MD Bartram & Co
Tel: (01327) 359164 E-mail craigbees@bartramandco.co.uk
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