The government launched its Help to Buy equity loan scheme in April 2013 with the aim of giving a boost to first time buyers, who were increasingly struggling to get on the property ladder. Rapidly rising house prices and stalling salaries meant many people were forced to rent, which in turn meant a substantial proportion of their income was tied up, leaving little left to save for a deposit.
Help to Buy gives potential purchasers a five-year interest-free equity loan for up to 20% of the value of the property, or 40% for houses in London. This means that aspiring homeowners only need to save a five percent cash deposit in a Help to Buy ISA and finance a 75% mortgage.
There are some caveats; you can’t rent out the property you buy under the Scheme, you can only take out a repayment mortgage, and you can’t buy a property for a price over the specified limits.
Recent statistics from the National Audit Office state that by March 2021, the number of home purchases supported by the Scheme is forecast to be 352,000, with 37% of buyers in England saying they could not have bought their house without its support.
The Scheme has been so successful that it was extended beyond the three years for which it was originally planned. The government announced last year that it is again being extended from 2021 to 2023, although this extension will be restricted to first time buyers purchasing newly built homes, and there will also be new regional price caps which could reduce the maximum value of homes which can be bought under the Scheme.
Surrey is one of the most expensive places in the country to buy a property, with our area of Cranleigh and the surrounding villages being one of the most desirable areas. We all know it’s a wonderful place to live, but there can’t be many of us who haven’t worried about how our children could ever afford to make their home here.
The Scheme has therefore been a real asset to prospective local first time buyers. However, the Help to Buy ISA won’t be available to new savers after 30th November 2019. The thought of buying their own home has probably not crossed your childrens’ minds, but it makes sense, if you have a teenager aged 16 or over, to look ahead to the future and discuss the option of opening one of these ISAs. The bonus doesn’t need to be claimed until December 2030, so if it’s a possibility your teen might consider home ownership before then, have a careful look at the options. They may thank you for it eventually!
Decisions like this can be complicated; if you’re unsure, call in for a chat with our friendly experts here at Roger Coupe, or get in touch. We have all the facts at our fingertips and would be delighted to help.