Government Schemes Available to First-Time Buyers

The government’s Help to Buy Scheme closed in March this year. The scheme, which was particularly popular among first-time buyers, helped with the purchase of almost 390,000 homes worth £110bn over the ten years since its introduction in 2013, according to data recently released by the Department for Levelling Up Housing and Communities (DLUHC).

Help to Buy saw buyers benefit from a government loan worth up to 20 per cent of a property’s purchase price (or up to 40 per cent in London) to use towards the purchase price of the property, interest-free for the first five years.

Although not exclusively for first-time buyers, the scheme was particularly well-received by those taking their initial steps on the property ladder, with figures showing that just under 85 per cent of homes sold under the scheme went to this demographic.

The scheme’s closure has contributed to fears of a downturn in the property market amid concerns over spiralling interest rates and the cost-of-living crisis.

However, opportunities exist, and first-time buyers in particular, should remain optimistic, as various other government-backed enterprises are available to give first-time buyers a leg up.

If you are a first-time buyer looking to buy your first home, Berlad Graham can help. Our residential conveyancing solicitors have extensive experience helping people take their first step on the property ladder and will ensure your transaction runs smoothly.

Our team of reliable conveyancers can assist with buying and selling properties across the UK and can act for clients regardless of location. To speak to one of our residential property team, please call 0330 175 5655 or email info@bglaw.co.uk.

In this blog, our Conveyancing Solicitors look at the financial help available from the government if you are considering buying your first home.

 

1. First Homes Scheme.

The First Homes Scheme was launched in 2021. It allows first-time buyers a discount of 30%–50% when buying a new-build home from a developer or when buying a “second hand” property from someone who originally bought it as part of the scheme.

Not all new-build properties are included in the scheme. However, the government has specified that a quarter of all affordable housing sold by developers must fall under the First Homes initiative and has committed to adding a further 10,000 properties to the First Homes scheme every year.

The scheme is available to first-time buyers in England aged 18 or over. Certain other eligibility criteria apply, including that you must be able to get a mortgage for at least half the price of the property and that homes cannot cost more than £420,000 in London, or £250,000 anywhere else in England, after the discount has been applied.

When you subsequently sell the property, you can only sell it to someone who is eligible for the Scheme and must give them the same percentage discount as you received at the time of your purchase.

 

2. Mortgage Guarantee Scheme.

The Mortgage Guarantee Scheme was announced by the government in April 2021’s Budget. It enables people to buy a property valued at up to £600,000 with a 5% deposit. The scheme is not just open to first-time buyers. Existing homeowners looking to move and requiring a 95% loan-to-value mortgage can also apply, although certain eligibility criteria must be met.

The scheme was originally due to close at the end of 2022 but has now been extended until the end of 2023. Since its inception, the scheme has helped over 24,000 households, primarily first-time buyers, who make up 85% of scheme transactions.

 

3. Lifetime Individual Savings Account (LISA).

A Lifetime ISA is designed to help you buy your first home or save for later life. Individuals between the ages of 18 and 39 can save up to £4,000 a year, and the government will add a bonus of 25%.

You can make payments into a Lifetime ISA until you are 50, but you can only withdraw the money to buy your first home or wait until you reach the age of 60 when you can use it for other purposes.

Certain restrictions apply, including:

• Only first-time buyers can use Lifetime ISAs to buy a home.
• Properties must cost £450,000 or less.
• Homes must be those you plan to live in.
• Individuals who use a Lifetime ISA to buy a property must use a traditional repayment mortgage.

 

4. Shared Ownership.

Under the Shared Ownership scheme, you buy a share of the property (between 10% and 75% of the home’s total market value) and pay rent to a landlord on the rest. The scheme has been around since the 1980s in various forms and is primarily targeted at first-time buyers, although anyone can buy a home under Shared Ownership if they meet the eligibility criteria.

This includes:

• Your combined household income must be less than £80,000 (£90,000 in London).
• You are either a first-time buyer, or if you used to own a house, you no longer own it or are in the process of selling it.
• If you own your existing property through the Shared Ownership scheme, you can sell your current home to buy an alternative Shared Ownership property.

Conveyancing Solicitors for First-Time Buyers

Buying your first home can be daunting. At Berlad Graham, our highly knowledgeable conveyancing solicitors will guide and support you every step of the way.

We have years of experience helping first-time buyers take their first step onto the property ladder. We will guide you through exactly what is involved, taking care of all the necessary legal work, to ensure your transaction is carried out as smoothly and cost-effectively as possible.

Berlad Graham is accredited by The Law Society’s Conveyancing Quality Scheme (CQS), a recognised quality standard for SRA-regulated firms in residential conveyancing. It sets out the standards of competence, risk management and client service levels expected of practices.

If you are a first-time buyer looking for a reliable and responsive conveyancing solicitor, get in touch with Berlad Graham today. You can call us on 0330 175 5655 or email info@bglaw.co.uk.

To find out more about our residential property practice, click here.