What is the Help to Buy scheme?
Help to Buy is a scheme aimed at helping home buyers with smaller deposits purchase a new-build home.
The original Help to Buy equity loan scheme enabled people in England and Wales to purchase a new-build home with just a 5% deposit, which the government topped up with a five-year interest-free equity loan of 20% of the property’s value, rising to 40% in London.
Help to Buy has been hugely successful, assisting more than 300,000 people to buy a home since it was first launched in 2013, 82% of whom were first-time buyers.
How has Help to Buy changed?
Help to Buy changed in England and Wales on 1 April.
In England, a 40% equity loan is still available in London and 20% elsewhere, but the scheme is now open only to first-time buyers.
New regional caps on the price of properties that can be bought through the initiative have also been introduced to better reflect the local new-build homes market.
Previously, the scheme could be used to buy any new-build home costing up to £600,000.
The new caps, below, range from £186,100 in the north east to £437,600 in the south east. The price cap in London remains unchanged at £600,000.
- North east - £186,100
- North west - £224,400
- Yorkshire & 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
In Wales, Help to Buy remains open to homeowners but the price cap has changed to £250,000.
The equity loan scheme is available until March 2023 in England, and to the end of 2022 in Wales – with an option for an extra year.
You can find more details in our dedicated guide on the new Help to Buy scheme.
What’s the background?
Zoopla estimates that Help to Buy helped around half of all new-build home buyers last year.
Housebuilders responded to buyer interest generated by Help to Buy by offering more larger family homes, leading to a 33% jump in the number of four-bedroom houses being built over the past decade.
Although the planned changes to Help to Buy were announced in late 2018, three and four-bedroom homes continue to account for 78% of future housing supply.
Alex Rose, director of new homes at Zoopla, said: “There is still strong demand for new-build homes, with buyers looking for turn-key properties and no chains, as well as well-located properties.
“For those buyers with smaller deposits, Help to Buy and the new mortgage guarantee can help secure finance.”
How can you find a home with Help to Buy?
We’ve got handy tools to help you find exactly what you’re after. Take our Advanced Search tool - it allows you to search for homes available with Help to Buy.
Register with Zoopla for instant email alerts for your preferred types of property - you can save as many searches as you want.
If you’re considering selling and moving on, discover how much your home could be worthwith an instant online estimate based on powerful market data. And track your home and other properties you’re interested in so you’re ready to move when the time is right.
What other schemes are available to help buyers?
95% mortgage guarantee scheme
The new 95% mortgage guarantee announced by the Chancellor at the Budget in March, and starting this month, means that home movers who have smaller deposits will have access to a wider range of mortgage deals which they can use to buy a new-build home or a re-sale home.
Under the terms of this scheme, which runs until the end of 2022, the government guarantees the first 15% of the mortgage, so the lender is covered for this portion of the loan. What it means in practice for borrowers is that those with a 5% or 10% deposit will be able to choose from a wider range of home loans.
Shared ownership, where buyers only pay the deposit on - and need a mortgage for - the share of the property they are purchasing, could be another route to home ownership.
It means the amount of money required for a deposit is usually a lot lower than it would be if they were buying the whole property outright.