Help to Buy 2.0 Open for Business
First-time buyers can now apply for the new Help to Buy:Equity Loan scheme, to get on the property ladder with a new-build home.
The scheme is set to run from 2021 to 2023 and buyers will be able to move into their new home from 1st April.
This takes over from the previous Help to Buy scheme and focuses on first-time buyers, in line with the recent Government effort to create more homeowners.
For eligible buyers, the Government will lend up to 20% (or40% in London) of the cost of a new-build home (with regional price limits being set at 1.5 times the average first-time buyer price). The buyer will then be required to pay a deposit of 5% or more and arrange a mortgage of at least 25% to comprise the remaining cost. The equity loan is interest-free for the first five years.
As well as the regional price limits, the scheme includes stringent conditions for homebuilders to ensure consistent building standards are met, so the push for more affordable new-build homes doesn’t come at the cost of quality.
Both Housing Secretary, Rt Hon Robert Jenrick MP, and Director of Help to Buy at Homes England, Will German, pointed to the success of other affordable housing schemes and the previous Help to Buy scheme in helping hundreds of thousands of people into home ownership, while the latter also acknowledged the intended confidence it will provide homebuilders during a time in which no industry is taking any surge in business for granted.
By really targeting first-time buyers, the scheme looks to secure the mid to long-term stability of the industry, with measures such as the Stamp Duty Holiday having already been implemented to help developers pushon in the interim.
With the previous scheme coming under some criticism for not really helping those who most needed it, with a report by the National Audit Office finding that 1 in 25 homebuyers using the scheme had an income of over £100,000 and 63% of Help to Buy homeowners could have bought a home without the help, the new scheme is doubling down on its commitment to first-time buyers who do need the support, which will hopefully help achieve the long-term goal of creating more homeowners, rather than just driving up sales amongst existing homeowners.