The Chancellor has confirmed in today’s Budget that the government will be extending the first part of the Help to Buy Scheme – Help to Buy equity loans – until 2020.
Mr Osborne also announced that 15,000 new homes will be built in Ebbsfleet, Kent, as part of a new garden city development.
Watch our response to Budget 2014 in the Which? Money Podcast video special
Go further: Budget 2014: The highlights – Which? rounds up the key announcements
Help to Buy Equity Loans extended
The first part of the government’s Help to Buy scheme, Help to Buy equity loans, will now run until the end of the decade. Government-backed Help to Buy equity loans are available to help people with a 5% deposit to buy a new-build property.
Go further: What is Help to Buy? – find out if you qualify
This part of the Help to Buy scheme was originally due to expire in 2016, but the Chancellor said it had been extended by an extra four years in order to help more people to get onto the property ladder and to bolster the UK construction industry. Mr Osborne said 120,000 new homes would be built as a result of the scheme.
The scheme only launched in April 2013, but government figures suggest that 15,000 buyers had bought property using a Help to Buy equity loan by January this year.
Eligible buyers can get a Help to Buy equity loan of up to 20% of a new-build property’s value, they then fund the rest of the purchase cost using a mortgage and a deposit of at least 5%. The loans are interest-free for the first five years and must be repaid in full when the property is sold, the mortgage ends or after 25 years – whichever happens first.
Go further: First-time buyer mortgages – tips for getting the best deal
No extension of Help to Buy 2
There was no mention of extending the second part of the Help to Buy scheme, Help to Buy Mortgage guarantees, in today’s speech.
Help to Buy mortgage guarantees are aimed at helping home buyers with a 5% deposit to purchase any property worth £600,000 or less. This part of the scheme is scheduled to finish at the end of 2016.
New property developments in London and the South East
The Chancellor confirmed that a new garden city will be built in Ebbsfleet, Kent, including 15,000 new homes. The Thames Estuary site has been chosen because of its strong transport links and availability of land for development. A new urban development corporation will be set up to lead on the construction of the new community.
There will also be funding for regeneration in Brent Cross and development in Barking Riverside in Greater London. Other property developments will also be supported through £500 million for small house-building companies in a new Builders Finance Fund.
A new ‘Right to Build’ scheme will also be launched and allocated £1.5m of funding to help individuals to build their own property.