The Government’s 2018 budget revealed that there will be changes to the current Help to Buy Equity loan scheme starting from April 2021. The government’s idea behind these changes is to offer the scheme to the people who need it the most – first-time buyers.
CURRENT SCHEME AND ELIGIBILITY
• The scheme is currently available to first-time buyers and previous home-owners. The property to be purchased must be newly built with a price tag of up to £600,000.
• The Government lends buyers up to 20% of the cost of the home they are purchasing. Buyers only need 5% deposit and a 75% mortgage to cover the outstanding amount. If you are purchasing a home in Greater London, the government lends up to 40%.
• Homeowners will not be charged loan fees on the 20% loan (40% if in London) for the first five years of owning the home.
• Homeowners won’t be able to sublet the home they purchased or enter a part exchange deal on their old home. Buyers must not own any other property at the time they purchase a new home with the help to buy equity loan.
THE NEW SCHEME
• The new equity loan scheme is available to first time buyers only and it will run for two years (1 April 2021 – 31 March 2023).
• Regional property price caps have been introduced. The caps are as follows:
North East £186,100
North West £224,400
Yorkshire and The Humber £228,100
East Midlands £261,900
West Midlands £255,600
East of England £407,400
South East £437,600
South West £349,000
Until the new scheme comes into force, first time buyers and previous homeowners will still be able to purchase homes through the current help to buy scheme. However, all homes purchased under the current scheme need to be legally completed by 31 March 2021.
What we can expect is a sudden rise in reservations by previous homeowners and it is paramount that developers, housing associations and law firms tread cautiously to avoid any delays or failed completions.
Comrades, get suited and booted for the rush!
If you require any further information, please contact Bernard Arhin at Bernard.Arhin@lawcomm.co.uk and I or one of our experienced conveyancers will be happy to assist you.