The Government’s popular Help to Buy scheme ended in March 2023. With more than 225,000 buyers taking advantage of the equity loan scheme since its launch in 2013, Help to Buy has enabled many people to take those first steps on the property ladder. So, now that the scheme has ended, what options are available to support buyers after Help to Buy? Read on to find out more.
What is Help to Buy?
The UK Government introduced the Help to Buy scheme to help prospective home buyers to own their own home. It provided assistance to those who could afford to pay a mortgage, but might have trouble finding a property they can afford to pay the deposit on. Under the scheme, the Government would lend buyers up to 20% of the value of the property (40% in London), for properties up to a value of £600,000. Prospective buyers were required to have saved at least a 5% deposit, and the loan was interest-free for the first five years.
When is the Help to Buy scheme ending?
Help to Buy’s equity loan scheme closed for new applicants on 31 October 2022, and ended altogether in March 2023, after 10 years of helping buyers realise their dream of owning of their own home. The previous government also phased out the separate Help to Buy ISA, the savings account designed for people saving to buy their own home. The account has been closed to new applicants since 2019, and while account holders can still keep their accounts, they only have until 1 December 2030 to claim their 25% bonus. This bonus is payable to the account holder upon completion of their first home purchase.
What happens from now until the end of Help to Buy?
[Note: This advice only applied at the original time of writing in November 2022] The Help to Buy Equity Loan Scheme closed to new applicants at the end of October 2022. If you’ve placed an application with the scheme, you must legally complete your property purchase by 31 March 2023 to be eligible for an equity loan.
What are my options after Help to Buy ends?
Currently there’s no direct replacement for the Help to Buy equity loan scheme, though the previous government did introduce a replacement for the Help to Buy ISA. The Lifetime ISA (LISA) offers account holders the potential of a 25% bonus on their savings every time they pay in, but unlike the previous Help to Buy ISA, the Lifetime ISA allows you to deposit more each year, over a longer timeframe. This makes the potential bonus much larger, with up to £1,000 payable every year for up to 32 years.
First Homes
Currently, the simplest and most direct alternative scheme to help potential homeowners get on the ladder is the government’s First Homes Scheme. The scheme offers new homes discounted at least 30% compared to market value for first-time buyers. The discount is then passed on to future sales. There are conditions around the maximum value of the property (£250,000, or £420,000 in London) and the annual household income of the buyers (below £90,000). Currently (September 2024), this is the best and easiest way to get significant help in securing your first home, if you meet the criteria. Fortunately, we have a full guide to the First Homes scheme right here!
Shared Ownership
Another alternative to Help to Buy for prospective buyers is the Shared Ownership scheme. Shared Ownership allows buyers to purchase a share of a property and rent the remaining share of the property from a landlord or housing association. As a part-owner, you’ll only pay a mortgage for the part of the property you own, meaning you’ll also pay a lower deposit. You can also increase your share of the property over time, using an approach called ‘staircasing’. Just like the First Homes scheme, we’ve got a full guide right here if you’re interested in learning more about Shared Ownership.
Help to Build
Don’t want to buy a home, but would rather build it yourself? Then help is at hand via the Help to Build scheme. Launched on 27 June 2022, the scheme allows you to build your own home and secure a loan with the government for up to 95% of its value. I.e.: you only need a minimum 5% deposit and the rest is covered, up to a total home value of £600,000. While building your own home might sound daunting, it could be a vital alternative to buying an existing if you can’t secure a more traditional mortgage loan.
Private home buying assistance schemes
With the end of Help to Buy, some private businesses are starting to offer alternative schemes to help people get on the property ladder. Fable is a new scheme offering support to house hunters.
You can apply to Fable and if you meet their criteria, start searching for your new home that fits the budget they’ve approved. If your preferred home is eligible, Fable can buy the property for you. Over the next two years, Fable gives you the chance to build up a deposit to buy the house from them, or you can move out and cash in your savings.
Labour’s New “Freedom to Buy” Mortgage Scheme
During its successful election campaign, the Labour Party promised that it would introduce a new housing policy, called the Freedom to Buy Scheme. The plan is designed to help 80,000 young people get onto the housing ladder by acting as a guarantor for those who can’t afford a large deposit.
Essentially, it is very similar in purpose and design to the Mortgage Guarantee Scheme, though this is supposedly going to be a permanent offering, while the current scheme is only temporary. Additionally, the new scheme is going to offer “more comprehensive assistance” to buyers, though details have been slim. At the time of updating this article (September 2024) no new details have been given by the sitting Labour Government.
HomeViews is the only independent review platform for residential developments in the UK. Prospective buyers and tenants use it to make an informed decision on where to live based on insights from carefully verified resident reviews. Part of Rightmove since February 2024, we’re working with developers, house builders, operators, housing associations and the Government to give residents a voice, recognise high performers and to help improve standards across the industry.
