A roof over your head is a necessity – and it becomes a real asset when you own one. In these times of economic stress and inflation, it sometimes seems futile to achieve this. However, the government has stepped in, offering various schemes for first-time buyers which make it possible to see light at the end of the tunnel.
The purchasing property peak during the pandemic kept realtors including the Estate Agents in Berkhamsted very busy trying to accommodate the requirements of buyers and sellers. Now, they are also able to give valuable advice and updates on the schemes available for first-time buyers.
These are some of the incentives offered:
LISA: Lifetime Individual Savings Account is a means of saving to buy a first home or for retirement. A first home worth GBP 450,000 or less can be bought using LISA. The applicable ages are between 18 and 39 and the annual amount deposited can be up to GBP 4000 a year until the age of 50. The government will add a bonus of 25% to the savings, to a maximum of GBP 1000 annually.
Caution: There is a penalty if money is withdrawn after the age of 60 or for any reason other than a home deposit.
Help to Buy ISA: If this account was opened before December 2019, it can still be used for a deposit to buy a home before December 2030. It allows the same 25% bonus on savings to a maximum of GBP 12000, but the monthly amount of saving is limited to GBP 200.
Mortgage Guarantee Scheme has been extended till 31 December 2023 and allows just a 5% deposit on mortgage, with a government guarantee on new 95% mortgages. In the event of repossession, the guarantee partially compensates the lender for net losses. It applies to 80% of the buying value of the property, covering 95% of the net losses.
SDLT (Stamp Duty Land Tax): The extension of this scheme till 31 March 2025 allows first-time buyers to avail of:
- a threshold increase of NRB (nil rate band) on stamp duty to GBP 425,000
- a purchase increase of NRB on stamp duty for properties up to GBP 625,000.
First Homes: This scheme, available only in England, allows first-time buyers in certain locations to get a discount of at least 30% on the market price. The discounts will continue to apply so that new buyers will benefit each time the property is sold. The purchasers should be first-time buyers with an income not exceeding a certain limit (set by local authorities). 50% of the purchase price should be covered by a mortgage/home purchase plan.
Shared ownership, generally run by housing associations and usually open to first-time buyers only, allows a mortgage on a part of the property (ranging from 25% to 75%) with rent payable on the balance. The overall housing income should be within limits set by local authorities. Over time, the property can be “staircased” – by buying a larger share of the remainder till 100% of the value is reached.
Right to Buy/Right to Acquire: These housing policies, only in England, allow eligible tenants the right to buy their home from the local authority landlords at a discounted price. The tenants should have rented for a minimum of three years. These are popular for social housing tenants who can afford the required mortgage. The Right to Acquire is similar to Right to Buy with some prominent differences:
- the association may sell a different property to the tenant from the one they live in
- the discount is lower and it is a flat rate which does not vary according to the length of the tenancy.
Other projects: Other schemes for home ownership include:
- OPSO – Older Persons Shared Ownership – people over 55 years can buy up to 75% share of their home with the balance rent-free.
- FHTB – Forces Help to Buy – military personnel with 12+ months’ service can avail an interest-free advance (up to 50% of their annual salary) to purchase a home.
- HOLD – Home Ownership for people with Long-Term Disabilities – assists in purchase of property for such people on a shared ownership basis.
Despite the difficult financial situation, these government backed options are an incentive for first-time home buyers. Of course, each programme needs to be carefully studied and clarified with official sources to ensure that they are valid, updated and with accurate eligibility and discounts available. For those longing for their “own roofs over their heads”, applying for one of the above could make the dream a reality.