With a house market that is once again seeing ever increasing prices all too many people can find themselves facing huge deposits and mortgages that will last a life time. Where once there were 100% mortgages, now consumers are generally finding that anything less than a 10% deposit simply won’t do. This is particularly true of properties in the South and close to London, where consumers are expected to place anything up to 25% deposits before even being considered. Fortunately the Government has put into place a help to buy scheme that is making property more affordable. However, you’ll need to understand the ins and outs of the scheme if you’re to be sure it’s the right choice for you. This guide tells you all about the scheme, how it works and whether you may be suitable.
Shared ownership schemes are ran through various housing associations and can enable you to purchase a percentage of a property (this generally ranges from 25% to 75%); the share that you don’t own you then pay rent on.
For this scheme you will need a mortgage, however, given that you’re buying only a percentage the total of the mortgage makes it more attainable. This scheme means that properties are always in leasehold form.
There are no changes to the current Help to Buy Scheme which will run till March 2023. The new scheme will run from March 2021 till March 2023 and will lend up to 20% of the cost of a new home to the buyers.
There are a few very strict factors for qualifying for the help to buy scheme, here’s a quick summary:
● Your total household income needs to be £80,000 or less and £90,000 or less in London.
● You have to be either first time buyer, or a previous homeowner who now cannot afford to buy through the normal procedure.
● You are currently a council or housing association tenant (this is not in addition to the above points but is ‘instead of’).
There a special version of the scheme for those who are aged 55 or above. This scheme operates in exactly the same way, but means that you can only opt for a 75% ownership. Once you own this portion you will no longer be required to pay rent for the additional 25%.
There is also a special version of the scheme for those who have long term disabilities. Known as HOLD (Home Ownership for People with Long-Term Disabilities) this scheme can help those with disabilities find accommodation that is suitably adapted for the applicant’s specific needs.
If you purchase further shares in the property and end up with 100% ownership you are free to sell the home as you wish. If however the housing association still owns a share then you’ll need to offer the property back to the housing association first. This first refusal right lasts for 21 years, after which the property can be sold to the public.
To apply for the scheme you simply need to contact the Government’s official Help to Buy representative in your local area (who can be found on the official website).
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