Help to Buy for First time buyers – what will replace this scheme?

PUBLISHED: 24th Nov 2022

The Government’s Help to Buy scheme ends on March 31st 2023, having closed to new applicants on 31st October 2022.  This means you needed to have reserved your property and submitted your Property Information form to your Estate Agent by this date in order to use the scheme.

The main reason for the scheme was to help first time buyers with affoardability. At the time it launched lenders were unwilling to extnd their risk and lend to first time buyers with lower deposits. At this point, the Government stepped in with Help to Buy schemes to build lender confidence and to get house builders building for first time buyers. However, it has been reported that over the years the scheme was propping up the profiThis means you needed to have reserved your property and submitted your Property Information form to your Estate Agent by this date in order to use the scheme.ts of the housebuilders and contributing to inflating house prices – this meant that it some cases the first time buyers were often paying more than required.

So, many first-time buyers will be wondering what there will be to replace this scheme. Here are some different options that are available which cover a mixture of solutions: -

  • The Government has introduced a Help to Buy equity loan scheme, though the Government has introduced a replacement for the Help to Buy ISA. The Lifetime ISA (LISA) offers account holders the potential of a 25% bonus on their savings every time they pay in – this also allows you to deposit more each year, over a longer timeframe, with up to £1,000 payable every year for up to 32 years
  • The Government First Homes scheme. This scheme offers new homes discounted by at least 30%, compared to market value for first time- buyers. The discount is then passed on to future sales. There are conditions around the maximum value of the property (325,000, or £420,000 in London) and the annual household income of the buyer (below £90,000)
  • Shared ownership scheme – this allows buyers to purchase a share of the property and rent the remaining share of the property from a landlord or housing association. As a Part-owner, you’ll only pay a mortgage for the part of the property you own, meaning you’ll also pay a lower deposit too.
  • Private home buying assistance schemes – some private businesses are starting to offer alternative schemes to help people get on the property ladder. Fable is a new scheme offering support to house hunters. You can apply to Fable, and if you meet their criteria, start searching for a new home that fits the budget they have approved. If your preferred home is eligible, fable can buy the property for you.
  • The Mortgage guarantee scheme was launched after lenders retracted all 95% mortgages after the pandemic. Now the Government offers lenders a guarantee to encourage them to lend again. Search for a property valued at less than £600,000 and access the mortgage guarantee scheme from one of the participating lenders – you will need to be quick though as this scheme is being reviewed before its planned end in December
  • The Bank of Mum and Dad – most banks will accept a deposit that has been gifted (or partly gifted), although they may ask for written confirmation stating that it is a true gift. According to Legal and General, 49% of first-time buyers aged under 35 have had money gifted by their parents to make up the difference in any shortfall in the deposit.
  • Guarantor mortgages – with a guarantor mortgage someone will take on some of the risk of the mortgage by asking as a guarantor – this usually involves them offering their savings or their home as security against a loan and, should the borrower default commit to making the mortgage payments. The main advantage is the borrower can take out a larger mortgage, sometimes 100% of the property’s value, which is much higher than applying for a traditional mortgage.

If you are a first-time buyer and are looking to get on the first step of the mortgage ladder, David Phillip Estate Agents work in partnership with MAB Bingley, or if you require any information re the housing market then call David Phillip FRICS on 01134 676 400

David Phillip Estate Agents, 86, Leeds Road, Bramhope, Leeds, LS16 9AN, w: davidphillip.co.uk

Covering Leeds, North Leeds, Bramhope, Adel, Cookridge, Huby and Otley

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