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Help to Buy is changing: we tell you everything you need to know

Kevin


Kevin Beale – Specialist Distribution Manager: New Build

Published 02.10.2020

Getting a foot on the property ladder is never easy, which may explain the popularity of the government’s Help to Buy Equity Loan scheme since its launch more than seven years ago.

However, the scheme was only ever intended to be a temporary way of helping buyers who were struggling to fund a house purchase following the introduction of stricter lending rules in the aftermath of the financial crisis.

As part of its plan to phase out Help to Buy, the government has announced some changes which come into effect next spring and will run until March 2023 when the scheme is finally closed.

The first big change is that from 1st April 2021 a new Help to Buy England scheme will be launched which will only be available to first-time buyers purchasing a new build property (the changes don’t apply to the Help to Buy schemes in Scotland or Wales). As with the current scheme, the government will lend buyers up to 20% of the cost of a newly built home or 40% for those purchasing in Central London.

The second big change to Help to Buy England is the introduction of regional property price caps, with each area of the country having a maximum property value that will be eligible for the scheme as illustrated below:

Region Price cap for Help to Buy homes
April 2021 to March 2023
North East £186,100
North West £224,400
Yorkshire and The Humber £228,100
East Midlands £261,900
West Midlands £255,600
East of England £407,400
London £600,000
South East £437,600
South West £349,000

The new Help to Buy England scheme will replace the existing one, but for a short time applications will be acceptable on both, so there are some other key dates your customers need to be aware of:

  • 1st October 2020 - Customers can start applying for the new Help to Buy scheme. They must complete within six months, but not before 1st April 2021.
  • 31st March 2021 - This is the completion deadline for all purchases made using the current Help to Buy England scheme (with the exception of properties reserved before 30th June 2020, where the purchases can complete up to 31st May 2021).
  • 1st April 2021 - From this date, all Help to Buy England applications will be on the new scheme.

We’ll be supporting both the old and new Help to Buy schemes, but it’s important you check the product code on your application to ensure it corresponds to the correct scheme as applicants are unable to switch between schemes on an application that is currently being processed. If they wish to switch to the new scheme, any application in progress will need to be cancelled and a new application made to both Precise Mortgages and Homes England.

Please note that there are now new product codes specifically for the new Help to Buy England scheme. All other Help to Buy applications – Wales, Scotland and the outgoing Help to Buy England scheme – use a separate set of product codes. You can view our latest Help to Buy product guide here.

For more information, visit www.helptobuy.gov.uk, speak with a member of our Sales Team or call our dedicated support service on 0800 116 4385.

 

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