First-time buyers: what’s happening towards the Help to Buy scheme?
The Help to Buy Wales scheme continues to be extended by Twelve months and will now run until a minimum of March 2022.
The Welsh scheme has to date provided equity loans to more than 10,000 buyers, enabling them to buy new-build homes having a 5% deposit.
Here, Which? explains the way the extension works and investigate what’s happening to Help to Buy elsewhere in the UK.
Help to Buy Wales extended until 2022
Help to Buy Wales allows first-time buyers and homemovers to profit from the 20% equity loan in the government when buying a new-build home.
Buyers can then remove a 75% mortgage and set down a 5% deposit to cover the remaining cost.
Help to purchase Wales was set to close on 31 March 2021, but the deadline has been extended by a year. The Welsh Government says a further extension until 2023 may follow, but this is determined by funding in the UK government.
From next April, Help to Buy Wales will operate with slightly different rules. The maximum price of properties sold under the scheme will reduce from lb300,000 to lb250,000, and all sorts of homes will need to be ‘broadband-ready’.
What’s happening to assist to Buy in England?
The Assistance to Buy scheme in England also offers equity loans of up to 20% (or 40% in London) and is set to undergo some changes of their own.
From April next year, the government will limit the scheme to first-time buyers only, and maximum price caps is going to be set up.
The caps were set in August 2021 at 1.5 times the regional average first-time buyer price, and can vary from lb186,100 within the North East of England to lb600,000 in London.
This changes to Help to purchase came after developers faced allegations of inflating the prices of new-build homes sold underneath the scheme.
In June, Which? published exclusive research revealing more than 5,000 homes bought under Help to Buy were resold at a loss, despite average house prices rising significantly.
The government has been under pressure to extend the current form of Assistance to Buy given the coronavirus outbreak, but has so far rejected calls to do so.
Help to purchase Scotland
The Assistance to Buy (Scotland) Affordable New Build Scheme (to give it its complete name) was extended with a year in June, meaning it'll now run until March 2022.
The scheme offers equity loans as high as 15% of the worth of new-build homes priced up to lb200,000.
The biggest difference with the Scottish scheme is the fact that equity loans are supplied interest-free forever. In Britain, interest begins to kick in around the loans after 5 years of owning the home.
Does Northern Ireland have Help to Buy?
Northern Ireland hasn’t were built with a Assistance to Buy scheme because the closure from the nationwide mortgage guarantee scheme in December 2021.
Instead, the Northern Irish Government has focused its efforts on a handful of different choices for first-time buyers.
These include shared ownership and the Rent to possess scheme, where buyers receive a three-year tenancy on a new-build property and therefore are then provided with a 20% rent rebate when they purchase the property at the end of the word.
Is now the time to buy your first home?
It’s an elaborate time to purchase your first home, using the economic uncertainty around COVID-19 creating concerns that house prices will fall in the next Twelve months.
Property markets round the United kingdom has now reopened and also the stamp duty cut has brought a flurry of buyers to the market, but this tax break is going to be of limited use to many first-time buyers.
People buying their first homes in England and Northern Ireland already taken advantage of a lb300,000 stamp duty threshold, so only those spending a lot more than this are in position to save.
In Scotland, the threshold for first-time buyers continues to be temporarily raised from lb175,000 to lb250,000, meaning those buying towards the top of this bracket would save lb1,500.
In Wales, the threshold has additionally been raised lb250,000, meaning buyers spending this sum on a home would save lb2,450.
Mortgage issues for first-time buyers
The biggest issue facing first-time buyers in the present marketplace is deficiencies in mortgage options, specifically for individuals with deposits of 5% or 10%.
Around nine in 10 low-deposit mortgage deals have disappeared because the start of pandemic, and lenders who are offering 90% mortgages are setting strict limits on who can apply and how much they are able to borrow. Some are even launching ‘flash sales’ to help keep the lid when needed.
This implies that unless you’ve had a 15% deposit, you may struggle to get a loan in the present climate, and new information by Aldermore shows 46% of first-time buyers are considering delaying their move for up to a year.
A lack of mortgage options can make schemes like Help to Buy and shared ownership seem more attractive, but both can be expensive themselves, so your research before rushing in.
If you're thinking of continuing with buying your first home this year, consider taking advice from the whole-of-market mortgage broker, who are able to assess your financial circumstances to find a suitable mortgage deal.
