The obstacles to first-time buyers holding the key to their first home are often discussed at length in the media, not least with the uncertainty of Brexit looming all around us. So with this in mind, should first-time buyers be abandoning their dreams of owning their very own property without a substantial gift from the bank of Mum and Dad, or perhaps a lottery win? Turns out, it might not all be so bad.
In the 2018 Budget, the government announced an extension to the Help to Buy Loan initiative, taking the end date from 2021 to 2023. This means many more first-time buyers will be looking at a more achievable deposit of 5%, together with a 20% boost from the government, which for most is their golden ticket. Under the current Help to Buy Loan scheme, we at Hay & Kilner are seeing a busy first-time buyer market with a highly positive take up from a number of housebuilders.
From 2021, the Help to Buy Loan scheme will change somewhat in that it will be available to first-time buyers only but will still exclusively apply to the purchase of new-build properties. With the rules of the scheme focusing on first-time buyers securing their first main residence, there is seemingly a clear commitment to prolonging financial assistance for those previously held back by a ‘10% deposit’ culture, or a dependency on family members for this help.
Under the 2021 – 2023 Help to Buy scheme, qualifying property price caps based on 1.5% of the average regional house price will come into force. Although future house prices simply cannot be forecast in the current climate, a 1.5% cap is unlikely to prohibit the vast majority of first-time buyers who come to us in the North East, and will benefit those requiring the financial leg-up onto the property ladder the most. The government have stated they do not intend to introduce a further Help to Buy equity loan scheme after March 2023, so the best time to take advantage is now.
The availability of the well-publicised Help to Buy ISAs will continue for new ISA customers until November 2019. For those with an existing ISA, the bonus must be claimed by 1 December 2030. With a £50 government bonus for every £200 saved, it is a very appealing option for those saving up their own deposit. Although this particular scheme is coming to an end this year for new customers, we are seeing the rise in the promotion of Lifetime ISAs, which offer the same benefit of a 25% government bonus for those hoping to buy their first home. Each of these ISAs has their different requirements and benefits and the question of which is more suitable will be dependent on the circumstances of individual purchasers. One thing is certain; the ‘free’ 25% government contribution.
All of the above first-time buyer friendly initiatives have specific rules and regulations concerning forms and paperwork, timeframes, qualification criteria, amounts saved, closure processes and the bonuses themselves, so it is important to make your Solicitor aware you are participating in any scheme at the outset of your purchase, so they can check and process all of this in a timely manner for you.
At Hay & Kilner, our specialist new-build team in our Residential Property Department can advise on the distinct aspects of a new-build property purchase and are well-versed in assisting those new to the house-buying process.
For more information on any of the above, or to discuss how we can help you, please contact Charlotte Barker, or call 0191 232 8345.