Help to Buy has attracted criticism about its artificial inflation of house prices and now there is more bad news following the Government’s announcement that those looking to open a new Help to Buy: ISA have only until 30 November 2019 (a Saturday) to do so.
Anyone who has opened a Help to Buy: ISA account before closing date, can keep saving into it until 30 November 2029, after which no additional contributions will be accepted. The bonus offered by the Government must be claimed by 1 December 2030.
Help to Buy options
The Government created Help to Buy to support people in their attempts to get their feet on the property ladder, with a number of options available under the scheme.
Help to Buy: ISA
A long list of banks, building societies and credit unions offer Help to Buy: ISA and allows savers to put away up to £200 a month, which the Government will then top up by 25%, up to a maximum of £3,000. The account can be opened with up to £1,200 in month one.
The bonus offered by the Government, which can only be claimed when the saver is buying a home, will be added when the account is closed. The bonus must be used towards completion on a property and can’t be used to pay any additional costs like legal fees or estate agent’s fees.
When a saver is ready to purchase their first home, the bonus will be applied for online by the solicitor or conveyancer handling the legal aspects of the property purchase – the account will have to be closed for the bonus to be claimed.
Help to Buy: Shared Ownership
When a buyer can’t afford the mortgage for a whole house, Help to Buy: Shared Ownership offers them the chance to buy between 25% and 75% of the property’s value, whilst paying rent on the remaining share – which they may look to increase when they can afford to.
To take advantage of the scheme, the buyers must have a household income less than £80,000 a year (£90,000 a year or less in London), trying for a first property, or are an existing shared owner looking to move.
The shared ownership option is available on newly built homes or an existing property through a resale programme operated by a local housing association.
The buyers will need a mortgage to pay for their share of the purchase price of the property, or fund this through their savings. Shared ownership properties are always leasehold.
Help to Buy: Equity Loan
Another option for first time buyers as well as homeowners looking to move is the Help to Buy: Equity Loan. The home they want to buy must be newly built and cost up to £600,000.
Under this scheme, the Government lends the buyer up to 20% of the cost of the newly built property, with the buyers only having to find 5% cash deposit and arrange a mortgage for the remaining 75%. No loan fees are charged on the 20% loan for the first five years.
The Government has confirmed the current Help to Buy: Equity Loan scheme will run to March 2021 in its present format, before a new scheme takes over to run from April 2021 to March 2023.
The new scheme will be restricted to first-time buyers and have regional property price caps to ensure the scheme reaches the right people. The new scheme, same as now, will see the Government lend buyers up to 20% (40% in London) of the cost of a new-build home.
Whatever option you choose, or if you’re going it alone, buying any property is a big decision and good honest advice from a lawyer you can trust will make all the difference and ensure you can act with confidence.
If you would like to talk to Louise Saha, please get in touch with her on 01543 431933 or email at firstname.lastname@example.org for more information