With
changes to both the Help to Buy and Shared Ownership schemes due to come into
force at the beginning of April 2021, it’s vital that you remain fully up to
speed on how you may be affected by these impending changes.
The
latest figures from the Ministry of Housing, Communities & Local Government
outlined that a total of 291,903 properties were bought between 1 April 2013
and 30 September 2020 using the Help to Buy equity scheme. The data also showed
that 82% of all completions were by first-time buyers. The total value of the
equity loans was £17.4bn and the value of the properties sold under the scheme
equated to £79.2bn. In addition, between 1 July and 30 September 2020, 13,211
properties were bought with an equity loan.
So,
how does the new scheme differ from the old one?
The
new Help to Buy scheme, running until 2023, will be restricted to first-time
buyers and will operate with regional price caps in place (maximum property
price in London £600k and South East £437,600 for example).
You can borrow a minimum of 5% and up to a maximum of 20%
(40% in London) of the full purchase price of a new-build home. You do not pay interest on the equity loan for
the first 5 years (interest starts in year 6 on the equity loan amount you
borrowed). The equity loan, the deposit you have saved, and your repayment
mortgage cover the total cost of buying your newly built home.
Help
to Buy is not an all in-compassing solution but it can prove to be a viable
option for a variety of first-time buyers, even for those who may have had a
credit blip in the past.
Meanwhile,
the new Shared Ownership scheme will allow buyers to purchase a minimum share
of 10% compared to 25% previously, and will permit staircasing in instalments
of 1%, rather than 5% or 10% currently.
In
addition, a new 10-year period will be introduced for maintenance and repairs,
whereby the landlord or housing association will be required to cover costs
rather than homeowners.
Due
to the complexity of both schemes, it is vital to seek good, impartial, independent,
and professional advice before entering into any agreements.
