There are several Government schemes available that can assist first-time buyers.
- Help to Buy
- Right to Buy
- Shared Ownership
- Lifetime ISA
- First Steps London
- The Starter Home Scheme
A helping hand can make all the difference when it comes to buying a home, and not everybody can rely on family members. Since 1980, the Government has offered a way for people to get onto the property ladder with Right to Buy, and since the Help to Buy scheme was introduced in 2013, various other initiatives have been added. The choice has never been greater for first-time buyers to receive assistance, and with house prices rising, it may give you more choice of where to live, depending on your circumstances.
Help to Buy Equity Loan scheme
With an Equity Loan, the Government can lend up to 20% of the price of the property, helping you buy a home you could otherwise not afford.
This is available to first time buyers, and existing homeowners, who want to buy a new build house costing no more than £600,000.
Under this scheme, you can borrow 20% of the purchase price from the Government, or 40% in London, if you have at least a 5% deposit from your own savings. The loan is interest free for the first five years, after which the Government start charging interest.
The government owns 20% of your property until you pay back the loan.
The scheme is available until 2021.
Right to Buy
Right to Buy allows tenants in England and Wales who rent their home from their local authority to buy their home at a discount. The size of the discount depends on where you live, the type of property and the length of time you have lived there.
Tenants usually need to have rented for three years before they can buy under these schemes. Tenants whose council home was transferred to
another landlord such as a housing association, might be eligible to buy under the ‘Preserved’ Right to Buy or Right to Acquire schemes.
Right to Acquire is a scheme offered in England and Wales for housing association tenants who don’t qualify for Right to Buy. The discounts are slightly smaller.
Shared ownership lets you buy a share of a home from the landlord, who is usually the council or a housing association, and rent the remainder.
You need a mortgage to pay for your share, which can be between 25% and 75% of the home’s full value. You then pay rent on the share you don’t own. Later you can buy bigger
shares in the property up to 100% of its value.
Anyone with household income of less than £80,000 outside London or £90,000 inside London can buy a home through shared ownership. Read more in the government guide Shared ownership and how it works
As explained earlier in this guide, the new Lifetime ISA (or LISA as it is commonly called) can assist first time buyers with saving for their deposit. A 25% bonus gets contributed by the government on anything saved, up to an annual limit of £4,000.
First Steps London
This scheme aims to help lower income earners afford a first home in London. You part buy and part rent the property which can be a new build or older home.
There are eligibility criteria based on earnings, and you can’t buy a home on the open market. Find out more on the First Steps website.
The Starter Home scheme
The Starter Home scheme offers 200,000 new build homes with at least 20% off the market price to first time buyers under 40.
The discounted price for these homes should be no more than £250,000 outside London, and £450,000 in London.
For more information about the homes available in this scheme, visit the New Homes website.