What Government Schemes Are There To Help Me Buy A House?
There are currently a wide range of government schemes available to make buying a home more affordable. Some existing schemes have been recently updated too. Here is a run down of some of the most popular schemes available and how you can qualify. Compare Solicitors fees today.
Help to Buy
The newer version of the Help to Buy: Equity Loan scheme was launched on 1 April 2021. Designed for first-time buyers, it caps the regional property price limits allowed to ensure the scheme reaches people who need it most. This scheme will run until March 2023 and like the previous one, the government will lend homebuyers up to 20% of the cost of a new build home, and up to 40% in London.
This scheme must be used to buy your main residence and cannot be used to buy a second home or a buy-to-let property.
Buyers will need a deposit of at least 5% of the purchase price and can borrow 20% (40% in London) of the purchase price. This loan is interest free for five years. You begin paying interest in year 6. The loan payments are interest only, so you don’t actually reduce the amount you owe.
However, you can repay all or part of your equity loan at any time. A part payment must be at least 10% of what your home is worth at the time of repayment.
This scheme is available in England only.
For the full low-down of the new help to buy scheme see here.
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Right To Buy/Right To Acquire
The Right to Buy and the Right to Acquire are two separate government schemes where council and some Housing Association tenants can apply to buy the property they live in, at a discount.
- The Right to Buy scheme assists eligible council and housing association tenants in England to buy their home with a discount of up to £112,800 (£84,600 outside London).
- The Right to Acquire is a scheme currently only offered in England for housing association tenants who don’t qualify for Right to Buy. Discounts are slightly smaller.
To qualify for either scheme, you must meet certain eligibility criteria and the size of the discount varies depending on where you live and the market value of the property you want to buy.
- Tenants who lived in a council owned home before it transferred to another landlord such as a housing association, might be eligible to buy their home under the ‘Preserved’ Right to Buy or Right to Acquire schemes.
- Usually, tenants must have rented from the public sector (i.e. local council, housing association, armed services, NHS or foundation trust) for three years before they can buy under either of these schemes.
- The three years can be non-consecutive
- In Northern Ireland: this scheme is called the House Sales Scheme and is for tenants who rent from the Northern Ireland Housing Executive or a housing association.
- In Wales: Right to Acquire and Right to Buy endeded to all Council and housing association tenants on 26 January 2019.
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Shared Ownership
If you can’t afford the mortgage on 100% of a home, Shared Ownership offers you the chance to buy a share of your home (between 10% and 75% of the home’s value) and pay rent on the remaining share. You could buy bigger shares later when you can afford to.
The Government is now funding a new model for Shared Ownership through the Affordable Homes Programme between 2021-26 and up to 50% of homes delivered through this programme will be for the new model of Shared Ownership.
The main differences are:
- The initial stake has been reduced from 25% to 10%
- There is now a 10 year repair during which the shared owner will receive support from their landlord to pay for essential repairs.
- There is a new 1% gradual staircasing model enabling shared owners to staircase in smaller installments of as little as 1%, down from 10%, with heavily reduced fees.
- Shared owners have more control when they come to sell their home; they will be able to take control of the resales process from the landlord at an earlier point, giving them greater influence over the sale.
- The new model should be available to purchase from 2022 (a limited number of homes will be available before that).
Eligibility
You may be able to buy a home through Shared Ownership in England if:
- Your household earns £80,000 a year or less / £90,000 a year or less in London
- You are a first-time buyer, you used to own a home but can’t afford to buy one now or are an existing shared owner looking to move.
Under this scheme you can buy a newly built home or an existing one through resale programmes via housing associations. Youmust take out a mortgage to pay for your share, or fund this through savings. Shared Ownership properties are always leasehold.
Only military personnel will be given priority over other groups, however, councils with their own shared ownership home-building programmes may have other priority groups, based on local housing needs.
Hold Scheme – For People With Disabilities
If you have a long-term disability, the HOLD scheme in England could help you buy a home on a shared ownership basis (part-rent/part-buy). You could buy between 10% and 75% of the home’s value and pay rent on the remaining share.
You can only apply for the HOLD scheme if the homes available in the other shared ownership schemes don’t meet your needs.
You may qualify for a home through the HOLD scheme if you have a long-term disability and meet the following criteria:
- Your household earns £80,000 a year or less outside London, or £90,000 a year or less in London
- you are a first-time buyer, you used to own a home but can’t afford to buy one now or are an existing shared owner looking to move
Only military personnel will be given priority over other groups, however, councils with their own shared ownership home-building programmes may have other priority groups, based on local housing needs.
Older People’s Shared Ownership
The Older People’s Shared Ownership (OSPO) is for people aged 55 or over and works in the same way as the Shared Ownership scheme, but you can only buy up to 75% of your home. Once you own 75% you won’t have to pay rent on the remaining share.
These are just some of the most popular Government schemes to help people get on the property ladder. For a full list see here.
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