The UK government has not announced any plans to replace the Help to Buy scheme after it comes to an end in March 2023. However, they have introduced a new scheme called the First Homes scheme, which aims to provide affordable homes for local first-time buyers and key workers.
The First Homes scheme is set to provide a 30% discount on new-build homes for eligible buyers, with the aim of making homeownership more accessible for those who may be struggling to afford a property in their local area. The scheme is currently being piloted in several areas across the country, and it's expected to roll out nationwide later this year.
While the First Homes scheme is not a direct replacement for the Help to Buy scheme, it does offer a similar opportunity for first-time buyers to access affordable housing. Additionally, the government has also announced plans to create a new Mortgage Guarantee scheme, which will help buyers with a deposit of just 5% to access a mortgage for properties up to £600,000.
It's worth noting that the UK housing market is constantly evolving, and the government may introduce new initiatives in the future to support buyers and help them get onto the property ladder.
What is the Help to Buy scheme?
The Help to Buy scheme was launched by the UK government in 2013 as a way to help first-time buyers get onto the property ladder. The scheme has since been extended and modified, and it remains an important part of the UK housing market. In this blog, we'll take a closer look at the current Help to Buy scheme in the UK and what it offers to buyers.
What is the Help to Buy Scheme?
The Help to Buy scheme is a government initiative that provides financial assistance to people looking to buy a home. There are two parts to the scheme: Help to Buy Equity Loan and Help to Buy ISA.
The Help to Buy Equity Loan allows first-time buyers and existing homeowners to borrow up to 20% of the cost of a new-build home (or up to 40% in London) from the government. The buyer then needs to contribute a minimum of 5% as a deposit, and the rest of the cost of the home is covered by a mortgage.
The Help to Buy ISA, on the other hand, is a savings account that helps people save money for a deposit on a home. For every £200 saved, the government will add an additional £50 (up to a maximum of £3,000).
Who is Eligible for Help to Buy?
To be eligible for the Help to Buy scheme, you must be a UK resident and have never owned a home before, or you must be an existing homeowner looking to move to a new-build property. There are also certain restrictions on the price of the property, depending on the region.
The Help to Buy Equity Loan scheme is available until March 2023, while the Help to Buy ISA closed to new applications in November 2019.
Benefits and Drawbacks of Help to Buy
The Help to Buy scheme offers several benefits to first-time buyers and existing homeowners, including:
- Access to higher loan-to-value mortgages
- Assistance in building a deposit for a home
- Opportunity to buy a new-build property
However, there are also some drawbacks to the scheme, including:
- Limited availability in certain regions
- The cost of borrowing the government loan, which starts accruing interest after five years
- Potential difficulties in selling the property in the future due to the government loan's repayment conditions.
The Help to Buy scheme has helped many first-time buyers and existing homeowners to purchase a property in the UK, offering financial assistance in the form of an equity loan or a savings account. While the scheme does have some drawbacks, it remains a popular option for those looking to enter the housing market or upgrade their homes. As the scheme draws to a close in March 2023, it's important to consider alternative options and stay informed on emerging trends in the UK housing market.