Help to Buy is a government initiative designed to help first-time buyers buy a home. However, some of the schemes also help people who have purchased a property before.
A range of Help to Buy home ownership schemes are available in England, but there are some restrictions and rules for applying, and some schemes that were active may no longer be open. Here we provide an update of the different Help to Buy schemes and explain how they could work for you.
What is Help-to-buy?
There are a number of different Help to Buy schemes. Perhaps the most well known are the Help to Buy ISA and Equity Loan schemes, but both of these are now closed. There is also a Shared Ownership scheme, loans to help you build a property and schemes specific to council and housing association tenants.
What is a Help to Buy ISA?
The Help to Buy ISA helped people save for their first home, with the Government topping up people’s savings by 25% (as long as there was more than £1600 in the ISA). While the Help to Buy ISA closed to new applicants in 2019, people who had set their Help to Buy ISA account up before 30th November 2019 can still make deposits until November 2029. The 25% deposit can be claimed until November 2030.
The 25% bonus is activated when you buy your home. You should instruct your conveyancer to apply for the bonus at the time of your purchase.
What is a Lifetime ISA?
The Lifetime ISA replaced the Help to Buy ISA, and is in essence a similar scheme. It still has the 25% contribution from the Government, but with different restrictions. Applicants wanting to open a Lifetime ISA must be aged between 18 and 39, you can save up to £4,000 per year, and you must make your first payment before your 40th birthday. However, you can’t make any further payments or receive the 25% bonus after the age of 50. But your account will stay open and can earn interest after you turn 50.
Other affordable home ownership schemes
The Help to Buy Shared Ownership scheme gives you the chance to buy a share of a house and pay rent on the remaining share. If you can afford to, you can buy larger shares further down the line. Here are a few details about Shared Ownership:
- You can use Shared Ownership it you have a household income of £80,000 a year outside London or £90,000 within London
- Your share of the property can be between 25% and 75% of the property’s value
- You can be a first-time buyer, an existing shared owner wishing to move or use the scheme if you owned a home but cannot afford to buy a new one
- You can buy a new build or an existing property
- You will require a mortgage for your share of the purchase price or enough in savings to fund the purchase
- There are specific versions of Shared Ownership schemes available for people with disabilities and the over 55s
- Shared Ownership properties are always leasehold
A loan towards the cost of building a home
A Help to Build equity loan gives assistance to anyone who is building a home on land they are buying or already own. Applicants can receive between 5-20% of the land and building costs, up to a maximum of £600,000 (for both land and building costs) or £400,000 (if you already own the land you are building on). If you are building a home in London, your loan can be 40% of the total costs.
New-build property equity loan
A Help to Buy Equity Loan offered buyers up to 20% off the cost of a new build home. Buyers only needed to provide a 5% cash deposit with a Help to Buy Equity Loan, subject to eligibility, terms and conditions. However, this scheme closed to applicants in October 2022. Any home purchase made using a Help to Buy Equity Loan has to complete by 31st March 2023.
Buying your council or housing association property
People who live in council housing can use the Right to Buy scheme to help with buying their home. Public sector tenants can save up to 70% on the sale price under Right to Buy, and the discount increases the longer the prospective home buyer has been a council tenant.
The criteria for houses are:
- 35% discount for people who have been tenants for 3-5 years
- For public sector tenants of more than five years, the discount goes up 1% for every further year of tenancy, up to a maximum of 70% or £87,200 in England (£116,200 in London) – whichever is lower
The Right to Buy criteria for flats are:
- 50% discount for people who have been tenants for 3-5 years
- For public sector tenants of more than five years, the discount goes up 2% for every further year of tenancy, up to a maximum of 70% or £87,200 in England (£116,200 in London) – whichever is lower
Under the Right to Acquire scheme, housing association tenants can receive a discount of between £9,000 - £16,000 on the sale price of their property. The discounts vary according to the unitary and county council area location of the property.
You can apply to this scheme if you have had a public sector landlord for more than 3 years. These landlords can be housing associations, councils, the armed services or NHS trusts and foundation trusts. To be eligible, the property must have been built or bought by a housing association after 31st March 1997, or transferred from a local council to a housing association after the same date.
How to apply for help-to-buy
Applying for a Help to Buy scheme is quite straightforward. Speak to estate agents and developers selling new home stock with help to buy available. They'll often be able to recommend mortgage advisors who can guide you through the process. You can also look out for the Help to Buy logo on property developments.