Buying a home with Help to Buy:

The Government schemes explained

Residential Conveyancing - Buying & selling a property Hunt & Coombs can left

In early April 2018 it was announced by Kevin Stewart, the Minister for Local Government and Housing that the Help to Buy scheme will be extended in Scotland for a further two years beyond its anticipated deadline of 2019 noting that the scheme has helped thousands of existing and first-time buyers into new homes.

In England and Wales, George Osbourne announced in November 2015 that the equity loan scheme would be extended from 2016 until 2021 and in November 2017 stamp duty land tax (SDLT) was abolished for first-time buyers on purchases of residential properties of £300,000 or less to continue to help people get on the property ladder.

Yet there is still a lot of confusion surrounding the various schemes and when and to whom they will apply.

What are the schemes and am I eligible?

Equity loan

Firstly, this scheme is not exclusive to first-time buyers but can also be used by those who have previously purchased residential property. The key element is that the prospective home must be a new build property with a price tag of up to £600,000. Essentially, with as little as a 5% deposit of the asking price, the Government will lend you up to 20% of the value, meaning that your mortgage would need to cover the remaining 75%. It is important to note that this loan is interest-free for the first five years and appears as a second charge over your property.

On completion of your new build, you cannot own any other property or you will not qualify. As this scheme is only available to residential properties, you cannot sublet or enter into any part exchange deals on your old home.

Developers are keen to utilise this scheme and typically have sales executives that are familiar with the process, as well as contacts with local Help to Buy agents. Please note that whilst this scheme runs in England there are similar schemes operating in Wales, Northern Ireland and Scotland.

Shared ownership

Shared ownership is literally what is says – property ownership which is shared with the Local Authority of their agents. The percentages of which are largely determined by your mortgage capacity. In other words, if you cannot afford 100% of the property then you can buy a share between 25% to 75% of the home’s value. You will pay rent to the Local Authority on the remaining share that is not mortgaged and you will have the option to purchase more of the share in the future. This process is done by conveyancers and is referred to as ‘stair-casing’, which all of our offices can assist you with.

Am I eligible for Shared Ownership?

Your household must earn £80,000 or less per year and situated outside of London. For households in London this threshold for household income must not exceed £90,000. You must be either a first-time buyer or an existing shared owner looking to move. Therefore, properties available will either be new builds or resale shared ownership properties.

If you’re looking to purchase a shared-ownership property enquire through the Government’s website and contact a local Help to Buy agent.

Home ownership for people with long-term disabilities (HOLD)

If as a result of a long-term disability you require a property with particular housing criteria, then you can buy a home that meets your needs and is on a shared ownership basis. It must be evident when applying for HOLD that the alternative shared ownership properties available do not meet your needs.

Older People Shared Ownership

If you are aged 55 or over you can benefit from the above scheme. Similarly to the general shared ownership scheme you can purchase up to 75% of the property however, once you own a 75% share you will not need to pay rent on the remaining 25% share.

Help to Buy ISA

This involves opening a Help to Buy ISA with an eligible bank or building society. As an example; for every £200 that you save the Government will top this up by £50, enhancing savings by up to 25%. There is however, a cap of £3,000 on the amount the Government will provide you with. It is also important to note that these funds cannot be used for the deposit on exchange of contracts and are sent to your conveyancer on completion of the transaction. Importantly, these accounts are available to each first-time buyer and not per household.

The purchase price outside of London must not exceed £250,000, for London properties this stretches to £450,000. The property must be the only home that you will own, purchased with a mortgage and occupied by the person using the help to buy ISA. This scheme can be used in conjunction with both the equity loan scheme and the shared ownership scheme.

How can we help?

For further help, a quote or legal advice on Help to Buy schemes or any other area of buying and selling a house please contact one of our property lawyers at one of our four offices to discuss further or email info@hcsolicitors.co.uk.

Author

Naomi Dawson, Legal Assistant

Stephen Burridge, Solicitor

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This article has been prepared for general interest and information purposes only; it does not constitute legal advice and should not be relied on as such. While all possible care has been taken in the preparation of this article, no responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by the firm or the authors.