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Government Help to Buy a Home: Schemes, Applications & Guidance

Phi Spencer

By Phil Spencer

Due to rising house prices and difficulties saving, many of us need help buying a home.

For years, the government has launched schemes to give hopeful homeowners a helping hand onto the property ladder.

But, what are these? How can they help? Time for a breakdown of the options available to you.

Here’s a closer look at government help to buy a home.

Why do we need government programmes for buying a house?

First things first, why are government home buying programmes a necessity?

  • Rapidly increasing property prices have hit first-time buyers particularly hard
  • Increasing difficulties saving for a deposit (e.g. sky high rent)
  • A growing housing crisis has fuelled property price rises
  • The increased use of credit history checking has made mortgages much more difficult to get

Now we know the background for why so many need help getting a house, let’s explore how we can combat the issues.

Government help to buy a house - where it applies

It’s important to be aware of where government assistance for buying a house is applicable.

Help for first-time buyers, or indeed any buyers, in England, differs from that found in Northern Ireland, Wales and Scotland.

So, some schemes mentioned in this guide may not necessarily be available in these parts of the UK. In some cases, they may be available - but contain different criteria relating to how they’re used and what they do.

The Help to Buy ISA

This is one of the most famous programmes for those who need help to buy a first home.

In short, the Help to Buy scheme boosts your savings by up to 25%, giving first-time buyers a helping hand onto the property ladder.

How it works

When planning to buy a house, a maximum of £200 per month needs to be saved in a specific ISA, which the government essentially ‘tops up’.

Of course, there are some rules in place. For example, you need to have saved a minimum of £1,600 to receive the minimum government payment of £400.

The maximum loan you can receive is £3,000!

This does not need to be paid back.

Who is eligible?

Unsurprisingly, not everyone is eligible for this scheme.

To qualify for help to buy, you must be:

  • A UK resident with a National Insurance number
  • A first-time buyer

There are some rules in place for the properties that qualify also:

  • It must be priced over £250,000 (£450,000 in London)
  • It cannot be sub-let or be a secondary place of residence
  • It must be bought with a mortgage

As a result, understanding how mortgages work is vital for those hoping to qualify for the scheme!

The Help to Buy Equity Loan

Those who need help getting a home also consider the Help to Buy equity loan. This differs from the ISA, as you don’t need to be a first-time buyer.

However, it’s one of the more popular house buying programmes among hopeful homeowners.

How it works

With equity loans, you do need to pay them back. But, you can borrow more - as the government will lend up to 20% of the purchase price. This rises to 40% in London.

You’ll also need a mortgage. In London this is usually up to 75% of the money required, or 55% in the rest of the UK.

A 5% deposit must be saved by the buyer.

Who is eligible?

You must meet the following criteria to be eligible for the equity loan:

  • It must be the only home you own - and you must have no plans to sublet
  • The property must be a new build
  • The purchase price should be up to £600,000 in England, and you must prove you can’t afford this without help

The Right to Buy scheme

Another well-known home ownership programme for low-income families or first-time buyers is the Right to Buy scheme.

What does it do? Who can apply? Let’s take a closer look…

How it works

If you have been a social housing (council) tenant for more than 3 years, you may have the right to purchase your property..

These years don’t have to run back to back!

But, the qualifying tenancy period may be reduced if your partner/spouse or parent was a previous tenant.

However, housing association tenants aren’t usually eligible.

Taking advantage of the RTB scheme

So, if the Right to Buy scheme sounds right for you, what does the process look like?

  • First step: complete a formal application and send it to your landlord
  • The landlord must say “no” or “yes” within 4 weeks (8 if they have been your landlord for less than 3 years)
  • If they don’t agree to sell, they must provide you with a detailed explanation in writing
  • If they agree to sell, they must make you an offer within 8 weeks for freehold property, or 12 in the case of leasehold
  • The landlord’s offer must contain full details of their calculation of the property’s offer value and how they have worked out your discount. They must also declare any known problems with the property (e.g. subsidence)
  • You have 12 weeks to consider and accept or refuse their offer. If you disagree with your landlord’s property valuation, you have a legal right to ask for an independent one

The Shared Ownership scheme

Another famous government buying scheme is Shared Ownership.

How it works

This scheme helps you buy a share of a home, allowing you to part rent and part buy.

In short: you own part of your home (25% to 75%) and pay rent on the rest.

Who is eligible?

This scheme isn’t solely for first-time buyers, as anyone earning under £80,000 (£90,000 in London) can apply.

But, it’s hugely popular with those who haven’t owned a home before, and can’t afford to alone.

The Starter Home scheme

The Starter Home scheme is a new form of government help to buy a home, and will be in place for first-time buyers only.

While it hasn’t begun yet, it’s hoped it will have a significant impact in helping more and more people get their foot on the property ladder. Those interested can register already.

How it works

The scheme will help hopeful homeowners onto the property ladder by offering a 20% discount.

This applies to new-build homes only. Maximum sale price for these newly built homes will be £250,000 (£450,000 inside London).

The Rent to Buy scheme

The Rent to Buy scheme is an initiative designed to increase home ownership in the UK. The emphasis is on people who are unable to save any sort of deposit.

How it works

Essentially, the scheme applies new accommodation provided at a rental cost significantly below average market prices.

A major component of this scheme involves renters having the opportunity to purchase the property with a 10% contribution, which is provided by Rentplus.

Rentplus has said it will have over 5,000 rent-to-buy homes located in various parts of the country by March 2020. This is hoped to have a positive impact on those looking to buy a new build.

The scheme is funded by pension funds or investors looking for ethical investments.

Schemes can get you onto the property ladder, but it also helps to be armed with all the necessary advice. From insurance rates to deposits, we have plenty of help for first-time buyers in one place. The more you know, the better! 

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