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The Help to Buy Scheme – A Brief Guide

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The housing market has seen unprecedented growth in the last two or three decades, as market prices boomed – a double-edged sword, as homeowners saw their equity outpace inflation, but first-time buyers found it harder and harder to purchase their first property. However, the existence of a government programme has helped prospective buyers – and could help you too.

What is Help to Buy?

The Help to Buy scheme is a government scheme which was introduced in 2013, by then-Chancellor of the Exchequer George Osborne. The scheme is designed to assist first-time buyers with getting onto the property ladder, as well as to boost the sale of new build homes in the UK, and exists as the spiritual successor to the FirstBuy scheme introduced in the 1980s. Help to Buy includes a series of measures and resources to assist buyers with purchasing their first home, including ISAs and New Buy measures. The measures most commonly invoked when talking about the scheme are in the form of an equity loan, or a mortgage guarantee.

How it Works

If you are someone who is looking to buy their first home, you can apply for an equity loan to help you with your first-time purchase. This equity loan grants the government an equity share in your home of up to a certain percentage depending on location – a stake they maintain until the loan is paid off in full. The Help to Buy equity loan enables you to make an offer on a new-build home with a mere 5% deposit on the price of that home, with a cap also dependent on location. If you were looking at new homes in Beverley, Yorkshire, you would be able to apply for a Help to Buy equity loan on homes up to £228,100 in value, and the government would retain up to a 20% equity stake. If you were browsing new builds in London, the market price cap would be £600,000 and the equity stake up to 40%.

How to Qualify for Help to Buy

Eligibility for the Help to Buy scheme is simple and broad. In order to be able to apply for one, you need to be a first-time buyer looking at a new build home, and the new build home must be below the regional price cap for house value. Additionally, both yourself and anyone with whom you are attempting to purchase a home must not own, or have owned, land, nor must you have had an Islamic mortgage at any point. There are no barriers to access besides prior land or home ownership, and legal residence in the UK.

Is it Worth It?

The Help to Buy scheme has been instrumental for younger families to get into the housing market, as the barrier to access has increased with booms in the housing market. There has been some discussion over whether the scheme is contributing to a housing bubble, and some concerns that the scheme limits prospective buyers to certain properties and lenders – but as a whole, the scheme is a vital route to ownership for many where getting on the ladder many not have been otherwise possible.