The government’s Help to Buy scheme is changing in England.
The government launched the Help-to-Buy scheme back in 2013 to help homebuyers purchase a new build with a small deposit.
Original Help to Buy
The original scheme allowed house hunters to purchase a new-build property worth up to £600,000 with a 5 per cent deposit and a 20 per cent government-backed loan. This scheme will end on 31 March 2021 and its successor will run until March 2023.
New Help to Buy rules
Under the new rules, from 16 December this year, buyers can reserve a home but will not be able to move in until the new scheme starts next year.
While the previous scheme was available to all homebuyers, the government is restricting the revamped scheme to first time buyers only. They have also introduced new regional caps. For example, in the North West, the cap is £224,400. They have based the cap on 1.5 times the average house price of a first home in the North West. Of course, there are vast regional variations within the North West. What buys a decent two-bed new-build in Burnley does not correlate with the cost of a two-bed home in Formby, for example.
The price cap is likely to prevent first-time buyers’ future-proofing their purchase. While £224,400 is a lot of money, it will not allow buyers to purchase a four-bed home in the hope they can stay in their new home if they start a family.
A further risk is that home builders will build with that top price in mind, a move which could flood the market with unsaleable two-bed flats.
Following the first lockdown, homebuyers are seeking three-bed properties with a garden. A glut of one of two bedroom flats would do little to alleviate the need for additional housing.
Help to Buy New Build Purchase
If you are using the Help-to-Buy scheme to buy in Southport and the surrounding area, contact us for a free, no obligation quote.