One aspect of the 2018 Budget that aims to help people buy property is the extension of the Help To Buy scheme to 2023. The scheme was previously scheduled to end in 2021 and there has been a considerable level of debate as to the merits of the scheme. Recently, there have been revelations that the scheme has done more to assist existing homeowners that people looking to buy their first home.
Therefore, the news that the extension of the scheme will only be open to first-time buyers between 2011 and 2013 goes some way to making the scheme more accessible to those it was initially intended to help.
The equity loan scheme, which offers a 20% loan from the Government, rising to a 40% loan in London, for people buying new-build properties has been extended for two years for first-time buyers. There has also been a change in the price caps for homes which are deemed to be eligible for the scheme. The new cap will be set at 1.5 times the average price that is forecast for first-time buyers in an area.
This is an important change because it takes the huge regional variation of property prices across the country into consideration. With respect to London, the maximum price of a home that will be eligible for the Help To Buy scheme will be £600,000 and in the South East of England, the cap will be set at £437,600.
Given the disparity in property prices across the country, the cap in the North East of England will be set at £186,100.
If you are looking to buy property, and you are a first-time buyer, the tweaks to the scheme should provide you with more support in raising the required deposit. For most buyers, it is the deposit that is the stumbling block or major barrier to overcome when it comes to the property market. By providing even more support, and support that is relevant to the area the buyer wants to purchase property in, it should be easier for more first-time buyers to make their way onto the property market.
With the Help To Buy scheme requiring buyers to place a 5% deposit on the property, there is still a need to raise significant sums in advance of buying a property, but the goal is more affordable than it would be without the scheme in place.
The buyer will then have to arrange a mortgage for the remaining balance of the property, 55% of the price, and hopefully, this will be within the budget of most willing buyers and households.
The fact that the scheme is only available for new build properties may limit its usefulness to vendors looking to sell their home. A measure that helps more people buy a property usually has a knock-on effect on people selling their home, but the limitations of this scheme mean that it is developers who will likely benefit.
However, increased movement in the property market should be encouraged and there will be many buyers who find their options have improved with the alterations to the Help To Buy scheme. If you are considering making a move in or around Ilford, please get in touch with Hansons Estates and we will be more than happy to assist you.