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Schemes to Help Buy a Home

Thursday, September 15, 2016

For many homebuyers; attempting to save for a deposit, securing a mortgage or finding the perfect home at the right price can be a real problem.

To tackle this issue, the government has set up a number of schemes to help you get on the property ladder, such as Help to Buy, Right to Buy, Shared Ownership and others.

Here’s our guide to these schemes, and how to apply to each of them.

 

Help to Buy

Help to Buy is a government scheme that allows you to move home with a deposit of as little as 5% of the value of the property.

There are two ways to make use of the scheme.

  • Equity loans: The government lends first-time buyers and existing homeowners money towards a newly built home, of which the purchase price must be no more than £600,000. Under this scheme, you can borrow 20% of the purchase price interest-free for the first five years as long as you have a 5% deposit. If you live in London, you can borrow up to 40% of the purchase price.
  • Mortgage guarantee: The government promises your lender that it will cover part of any losses it may sustain as a result of the mortgage not being repaid. The scheme is available for new and old properties across the UK.

A guide to Help to Buy ISAs

 

Right to Buy

Right to Buy gives tenants across England, Wales and Northern Ireland who rent their property from a local authority the chance to purchase it at a significant discount, provided they have occupied the property for a minimum of three years.

Those three years can also be non-consecutive, so those who have moved into private property between two spells of public-sector tenancy totalling three years can still qualify.

From 6 April 2016, council tenants – or those living in local authority housing at the time it was transferred to other landlords – will benefit from bigger discounts should they want to buy their property, amounting to £77,900, or £103,900 if you live in London.

 

Shared Ownership

The Shared Ownership scheme allows buyers to purchase a share of a home from the landlord – usually the council or a housing association – and rent the remainder.

You need a mortgage to pay for your share, which can be between 25% and 75% of the home’s full value. You then pay a reduced rent on the part you do not own, but have the option of later buying a bigger share in the property, up to 100% of its value.

 

FIRST STEPS London

FIRST STEPS London aims to help low-income or modest earners buy or rent at a price that’s affordable. As in Shared Ownership, partly buy and partly rent the property. The scheme applies mostly to new-build homes, but some resale properties are included.

 

Starter Homes scheme

Launched in 2015, this is a government initiative under which 200,000 new-build homes are available and offered at a 20% discount to first-time buyers under the age of 40.

A cap is applied on the price of homes available under the scheme, set at £250,000, or £450,000 if buying in London.

 

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