New Help to Buy scheme for 2021-2023

New Help to Buy scheme for 2021-2023
Help to Buy is a government scheme designed to help those with small deposits purchase a home. The current Help to Buy scheme will be replaced by a new scheme in April, which will only be available to first-time buyers and will impose regional price caps on eligible properties.
What are the deadlines for the current scheme?

Under the current Help to Buy scheme, the deadline for properties to be built was originally December this year. However, homebuilders are being given a bit longer to finish building homes as a result of coronavirus lockdown measures delaying construction. Property construction must now be finished by 28 February 2021, and the legal completion of the purchase must take place by 31 March 2021. The deadline for new applications has now passed.

Remember that the property purchase process can easily take three months to complete, and maybe even longer due to the impact of coronavirus, which has caused severe delays and backlogs for lenders, valuers and surveyors. Help to Buy agents are also experiencing delays. If these deadlines are not met, you’ll no longer be eligible to receive the government’s equity loan in its current format.

When will the new scheme begin?

The new Help to Buy scheme will be available for a period of two years from 1 April 2021. It will finish on 31 March 2023 and so far no further equity loan scheme has been announced. Applications can be made from 16th December 2020, but purchases using the new scheme cannot complete until 1 April 2021.

How will the new Help to Buy scheme work?

The new Help to Buy scheme will only be available to first-time buyers with a 5% deposit, and not those who already own a home and are looking to move on.

Rather than the scheme applying to all new build homes in England costing up to £600,000, new regional price caps are being introduced. These mean that if the price of the property you want to buy exceeds the cap that applies to the area where you’re buying, you won’t be eligible for the scheme.

The new Help to Buy regional property price caps are expected to be as follows:

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

Like the current scheme, the government will lend up to 20% of the property price interest-free for the first five years, or up to 40% of the property price in London. Interest will then be charged at the same rate as it is now, so in year six you start paying a monthly interest rate of 1.75% of the equity loan. After that, your interest rate will rise each year in April by the Consumer Prices Index (CPI) plus 2% until the loan is repaid. You’ll also pay a monthly management fee of £1 for the life of the equity loan.

Visit the Help to Buy equity loan website for futher details.

Local Help to Buy Agents

• Agent for the North

• Agent for the Midlands and London

• Agent for the South

L&C is a recommended Help to Buy broker. As experts in new build property mortgages, we’ll work out your eligibility from 1000s of deals from across the market and for any Government schemes.

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