Will the brand new Help to Buy scheme make it easier to buy your first home?

More than 240,000 first-time buyers have bought a home while using government’s Help to Buy scheme, and can its upcoming overhaul prove to be an aid or perhaps a hindrance for individuals wanting to get on to the property ladder?

From April, the federal government will introduce price caps on its long-running housing scheme, but critics have suggested this can modify the number of Help to Buy homes built traded in the future.

Here, Which? analyses the upcoming changes to Help to Buy and explains how you can affect purchase a home using the scheme.

What is Help to Buy?

The government launched the Help to Buy equity loan scheme in April 2021.

It allows first-time buyers and home movers in England to profit from the 20% equity loan (40% working in london) on a new-build home, letting them buy with a 5% deposit. Equity loans are provided interest-free for 5 years.

So far, 291,903 homes happen to be bought using Assistance to Buy, with 240,083 (82%) going to first-time buyers. But the scheme is set to be overhauled from 1 April.

What’s changing from April?

From 1 April, the Help to purchase scheme will be limited to first-time buyers only, and regional price caps is going to be set up to limit how much homes can be sold for.

These caps are positioned at 1.Five times the average price paid by first-time buyers in every region, by Autumn 2021. The maximum prices are the following:

Why is Assistance to Buy being overhauled?

There have always been concerns within the prices of homes sold underneath the Help to Buy scheme, which have soared since its inception in 2021.

Last year, Which? revealed that a lot more than 5,000 Assistance to Buy properties have been resold at a loss, despite overall house prices rising significantly throughout the same period.

The scheme has additionally been accused of boosting the borrowing power of individuals who might have afforded to purchase a home on the open market, rather than prioritising people who needed extra help.

The government’s most recent data shows that 30% of Help to Buy users to date have had a typical household income of lb60,000 or more, with 12% having incomes of more than lb80,000.

Will developers build homes under the new scheme?

When the federal government announced the upcoming price caps in Autumn 2021, it faced criticism for setting the figures a lot more than two years before they'd come into force.

Developers and estate agents expressed concerns when house prices rose significantly in the interim, this would then modify the quantity of homes built underneath the latest version of the scheme.

As it happens, prices haven’t soared in the last few years, and caps set in 2021 remain well above the average prices paid by first-time buyers in all regions, as shown within the chart below.

To date, there aren't any signs that the biggest house builders will be put off by the new version of Assistance to Buy.

We visited those sites from the five developers most abundant in Help to Buy sales (according to a study through the National Audit Office) and located that Persimmon, Barratt, Taylor Wimpey, Bellway and Redrow counseled me already advertising homes to be removed under the new scheme.

How will i find a Help to Buy home?

There are a number of ways you can find Help to purchase properties in your town.

• Help to purchase Agents: you can look for a Help to Buy property online of the regional Help to Buy agent. The government provides details of how to find your nearest agent online.
• Property portals: the biggest property portals can be hit or miss when it comes to Help to Buy. Rightmove enables you to limit your research to new homes, but you’ll then may need to look at individual listings to ascertain if they are offered around the scheme. Zoopla works similarly. The specialist new-build portal Share to purchase allows you to filter your research exclusively to assist to purchase homes, as does What House?.
• Developers: one of the simplest ways to locate a Assistance to Buy house is by looking around the websites of a few of the biggest developers. Developer websites allow you to search by postcode for the nearest development and could contain more details about specific properties or plots than you’ll find on the portal.
• Estate agents: high-street auctions sometimes include new-build homes on their own listings, if they have a partnership using the developer under consideration. This isn’t commonplace, however, so you may discover the other options more fruitful.

Can I already apply for the brand new scheme?

Applications for the new iteration of Assistance to Buy opened on 16 December, meaning it’s already possible to reserve a new home under the scheme – if you won’t be able to complete and move in before 1 April.

You can find full step-by-step details of how to apply for Assistance to Buy in our story from December.

Alternatives to Help to Buy

Help to purchase has been incredibly well-liked over the last eight years, but there are several other options readily available for first-time buyers.

• 90% mortgage: if it can save you a 10% deposit, a conventional mortgage will allow you to take a look at existing in addition to new-build properties, and can also set you back less over time.
• Shared ownership: these schemes allow you to purchase a share in a house (from 25% upwards) and pay rent around the remainder. Shared ownership schemes will help you jump on towards the ladder if you live in an expensive area, but the combined cost of the mortgage, rent and repair charge can also add up.
• Guarantor mortgages: these mortgages allow parents to make use of either their savings or their property as collateral for their child’s mortgage. Find out about the differing types within our full guide.

Help to Buy round the UK

Until recently, Help to Buy schemes were in operation in both Scotland and Wales.

The Scottish scheme closed to new applicants earlier this month. First-time buyers in Scotland can still take advantage of the government’s First Home Fund and Low-cost Initiative for First Time Buyers.

Help to purchase Wales continues to be in operation. It offers a 20% equity loan to first-time buyers and home movers buying new-build properties priced as much as lb300,000. Find out more within our full help guide to Assistance to Buy Wales.