All things have to end eventually – even Stranger Things – and as you may be aware, the Help to Buy equity loan closes for good in March 2023. What’s more, the Halloween deadline for the last applicants has now passed.
It’s always hard to say goodbye, but as we deliver the last rites on everyone’s favourite government-backed first time buyer scheme, what comes next and can we still swipe for our fantasy home on Rightmove?
Is anything replacing Help to Buy?
Officially, Help to Buy is being replaced by… (drumroll)... nothing. As it stands, there is no Help to Buy replacement or extension waiting in the wings. Now of course, politicians famously never change their minds, and given we’ve had more recent Prime Ministers than Lady Gaga’s had wardrobe changes, one can never be truly certain of what the future holds.
But while Help to Buy is seemingly not being replaced, that doesn’t mean help for first time buyers doesn’t exist – far from it.
Other schemes for first time buyers
The dream of having your own front door – and perhaps a garden gnome or two – shouldn’t end with the demise of Help to Buy. Luckily, there are alternative forms of first time buyer help.
How do you like the idea of a half price house? First Homes is a new government-backed first time buyer scheme giving key workers and those with a local connection the opportunity to buy their own home at a discounted rate.
The key thing with this policy is that the discount applies forever, in contrast to the Right to Buy scheme, where historically, residents could buy a property for a bag of chips and sell it for a King’s ransom. It’s up to each local authority to decide who qualifies as a ‘local’, so having a long lost aunt who once visited Mayfair may not count.
Before we get too excited – yes, the scheme could help first time buyers, but it’s early days yet. First Homes only had a soft launch in June 2021 and it’s starting small – around 1,500 First Homes are expected to be rolled out in 100 locations in England over the next two years.
Just like David Blaine in that box over the Thames, Shared Ownership is not going anywhere. If you’re unable to pay the full whack for a home – and that’s understandable – the Shared Ownership scheme lets you buy a share of between 10 and 75% of a property’s full market value.
It’s available to first time buyers and existing homeowners, as well as buyers with particular circumstances, such as those forming a new household after a relationship has ended. To qualify, your household income will need to be £80,000 a year or less (or £90,000 in London).
Shared Ownership applies to older homes as well as new builds, so if you’ve got a penchant for pebbledash, you’re in luck.
Help to Build
Hang on, have they just replaced the word ‘Buy’ with ‘Build’? While the two schemes are similar, there’s way more to it than that.
Help to Build is a new scheme providing equity loans to those looking to self build, or ‘custom build’, their own home. Now, we’ve all had fantasies about building our own gingerbread house with a chocolate bathtub, but Help to Build isn’t just targeted at wealthy self-builders (or Willy Wonka). It’s backed by £150m of government money and is designed to help those with smaller budgets and savings. The idea is that by accessing a dedicated ‘self build mortgage’ from a registered lender, you can put money towards the otherwise pricey land and set-up costs.
Got a DIY streak? That castle in the sky you’ve always wanted to build could be closer than you think.
In the absence of a new Help to Buy scheme for 2023, Deposit Unlock is a new kid on the block that intends to fill the gap.
Developed by the Home Builders Federation and reinsurance firm Gallagher Re, Deposit Unlock aims to help first time buyers and existing homeowners buy a property with a deposit of just 5%. The homes must be new builds and constructed by a participating home builder. Plus, you’ll need to go through one of two lenders – currently Nationwide and Newcastle Building Society.
These days a 95% mortgage is as rare as a red squirrel, but Deposit Unlock makes this possible by enabling house builders to pay to insure the mortgages. In theory, this helps to persuade participating lenders that first time buyers are a safe bet.
Private schemes to help first time buyers
What scheme is replacing Help to Buy in our hearts and minds? Luckily, there is a whole glut of contenders mentioned in this helpful article from the HomeOwners Alliance. And…ahem, they even mention a little thing called Even. We won’t bore you with those guys, even though they can loan you up to two times your deposit (interest-free) to help you buy your first home. But like we said, we won’t bore you. But do check your eligibility. Just sayin’.