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Advice on ‘Help to Buy’

What is the ‘Help to Buy’ scheme?

Help to Buy is a Government scheme to help people get on – or move up – the property ladder. It was launched in 2013, to help homebuyers struggling to save a deposit for a mortgage and make new-build properties more affordable.

Under the scheme, the Government or a housing association give the buyer an ‘equity loan’ of up to 20% of the cost of a newly built property, meaning they only have to find a 5% deposit to get a 75% mortgage. The theory is that the bigger the deposit a buyer can put down, the more mortgages they can access.

While the initial phase of Help to Buy has now closed, a new version of the scheme was launched in December 2020.

Unlike the previous phase, which was available both to first-time buyers and existing homeowners, the new Help to Buy: Equity Loan (2021-2023) is limited to first-time buyers in England.

Changes to the Help to Buy scheme

The new Help to Buy: Equity Loan (2021-2023) scheme will run until 2023. Like the first phase, it will see the Government lend homebuyers up to 20% (40% in London) of the cost of a newly built home. Buyers find a 5% deposit to go with their equity loan and the rest of the property’s purchase price will be made up of a mortgage.

The equity loan is interest-free for five years. Interest will be set at 1.75% in year six and from year seven onwards will increase by the Consumer Price Index (CPI) plus 2% each year. Borrowers must repay their equity loan within 25 years, or earlier if the property is sold, at an amount equal to the original share (40% in London, 20% elsewhere) of the property’s value at the point of sale.

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Regional price caps

Help to Buy (2021-2023) has regional price limits, set at 1.5 times the average first-time buyer price in each region in England. This is intended to keep the cost of new homes closer to the average regional first-time buyer property price, reducing the amount they need to borrow. The new regional price caps are set as follows:

                       London – £600,000                                   West Midlands – £255,600                            North East England – £186,100
                       North West England – £224,400               Yorkshire and the Humber – £228,100         East Midlands – £261,900
                       East of England – £407,400                       South East – £437,600                                  South West, £349,000

In Scotland, the Help to Buy Affordable New Build scheme provides a 15% shared equity loan to first-time buyers and existing homeowners. Buyers must fund a minimum of 85% of the property’s purchase price with a mortgage and deposit, on new-build homes worth up to £200,000.

And in Wales, buyers can access a 20% equity loan and fund the remaining 80% through a minimum 5% deposit and a repayment mortgage, on properties worth £300,000 or less.

The Government has published an in-depth guide to the Help to Buy: Equity Loan (2021-2023) scheme to help buyers understand their options.

Do I need a home survey or valuation for Help to Buy?

If youre looking to purchase a property through Help to Buy, then getting a survey from a RICS regulated surveyor, while not required, is advisable. A survey will give you an accurate estimate of the condition of the property and uncover any hidden issues, so you can make an informed choice on whether or not to proceed.   

However, when your Help to Buy scheme comes to an end at five years, or if you are looking to sell a property you bought through Help to Buy within that timeframe, then the company running the scheme will specify that a RICS Professional (Red Book) Valuation is carried out undertaken by a RICS-registered valuer.

A valuation by a RICS-registered surveyor will give you a fair and accurate idea of the market value of the property, backed by detailed evidence of how they came up with their estimate. 

Because RICS is the professional body that represents the surveying industry, RICS valuations are the only valuations accepted by lenders, Help to Buy and shared ownership schemes.  

What will my valuation cover?

If you need a Help to Buy valuation carried out, the surveyor will assess the age, size, location, construction and condition of the property, as well as considering any development or renovation work that has been carried out.  

They will use this information to evaluate the property compared to similar homes in the same area, to estimate its value.  

The information used to determine the property’s value will be documented in the report to demonstrate how the surveyor arrived at their conclusions.  

Once the valuation has been completed, it will be valid for three months from the date of the report.  

Let us help

At GB Home Surveys, we offer a different approach to getting a home survey. Our service is thorough, convenient and hassle-free. It will provide you with all the information you need to make the right choices. We’re an independent, RICS regulated chartered surveyors and have been providing trusted services for almost 30 years.  

Our surveyors are RICS registered valuers and have vast local expertise and knowledge, so you can be sure you’re getting the best advice to help you buy or sell with confidence. We can provide tailored Help to Buy valuations, along with Shared Ownership, Equity Loan and Staircasing valuations to ensure you get the best advice and an accurate value of your property so that you can take your next steps with confidence. 

For a free initial consultation and a no-obligation quote, give our friendly team a call today to discuss your requirements.   

Looking for a quote, or maybe you have a question? Get in touch today.

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