How can I buy my first home

by Kidd Rapinet on July 26, 2018

For many in their early to late twenties it can be a real struggle to get onto the property ladder.

The UK government has recognised the problems surrounding the property crisis in the UK and the lack of affordable housing limiting the younger generation from taking their first steps onto the property ladder.

With this in mind, the government has introduced a number of incentives to stimulate the market and give a helping hand to first time home buyers.

Help to Buy scheme

An equity loan scheme is available for first time buyers and existing homeowners who want to purchase a ‘new build’ home. The only restriction is that the property must not be priced at more than £600,000.

Under this scheme, a buyer can borrow 20% of the purchase price interest-free for the first five years, as long as a deposit of 5% is present/available. If the buyer lives in London, then up to 40% of the purchase price can be borrowed. This scheme is set to run until 2021.

The government also offers a Help to Buy ISA. This operates as a bonus when the homeowner saves £200 a month, on which the government tops it up by £50 a month. The government will grant the potential buyer a maximum of £3,000 in order to boost ISA savings from £12,000 to an overall of £15,000.

Shared Ownership

From April 2016, anyone who has a household income of less than £80,000 outside of London or £90,000 inside London can buy a home through Shared Ownership.

This scheme enables a buyer to purchase a proportion of the property from a landlord, usually the council or a housing association. A mortgage may be required to pay for a share of property being purchased. This can be anywhere between a 25% and 75% of the property’s title value. A reduced amount in rent will then be paid on the share of the property that is not owned.

A larger proportion of the property can be purchased at a later date, up to 100% of the value of the property.

Right to Buy/Right to Acquire

This scheme is for tenants in England, Wales and Northern Island who are currently renting their property from their local council or housing association and enables the property they reside in to be bought at a discounted value. The size of the discount will vary depending on the property location and type.

To qualify for Right to Buy, the tenant must have resided in either a council home or association-owned property for at least three years. Restrictions apply accordingly.

Supply and Demand

The UK government has recognised the need for a greater supply in the housing market for first time buyers. While the methods above create incentives for first time buyers there are still many obstacles. The main one being the lack of available housing stock in the UK and further stimulation is required to enable the above schemes to become fully effective.

Disclaimer: Different schemes may apply in England, Scotland, Wales and Northern Island and local home-buyer schemes should be researched accordingly.

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