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3 Jun 2022

First-time buyers face race against time to use Help to Buy scheme

Deadline brought forward to 31 October as scheme winds down

The deadline for first-time buyers to use the government's Help to Buy scheme has been brought forward by two months.

Buyers now face a race against time to secure a property with an equity loan before the popular scheme winds down early next year.

Here, we explain why the Help to Buy deadline has changed and offer advice on the pros and cons of buying a home through a government scheme.

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Help to Buy application deadline brought forward

First-time buyers in England looking to use the government's Help to Buy scheme will now need to reserve a property by the end of October - two months sooner than expected.

The scheme will close at the end of March 2023, and it was anticipated that buyers would have until the end of December this year to secure a property. 

Homes England, the body which administers the scheme, says the deadline has been brought forward to October to ensure buyers have enough time to exchange contracts and complete their purchase before the scheme closes. 

Help to Buy: the key dates

If you're considering buying a property using Help to Buy, get these dates in your diary:

  • 31 October 2022, 6pm: this is the final deadline to reserve a home and submit a Property Information Form to your Help to Buy agent
  • 31 December 2022: the property you're buying must be ready for practical completion - this means it must be fully built and ready to live in
  • 31 March 2023, 6pm: you must have completed the purchase and moved into your new home. If you don't complete by this date, you won't be able to benefit from an equity loan from the government. 

If a developer won't be able to meet these dates, you should be informed before you commit to buying the property. 

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How does Help to Buy work?

The Help to Buy scheme was launched in England in April 2013. It enables first-time buyers and home-movers to purchase a new-build home with a 5% deposit. 

The government provides an equity loan of up to 20% of the value of the property (40% in London), which is offered interest-free for the first five years.

This allows you to get a mortgage for the remaining 75% (or 55% in London) of the property's purchase price.

Between April 2013 and March 2021, buyers could purchase new homes priced up to £600,000 using the scheme.

In April 2021, however new regional caps were introduced. These ranged from £186,100 in the North East of England to £600,000 in London.

Successes and failures of Help to Buy

Between April 2013 and December 2021, 356,000 homes were bought using the scheme, with 82% going to first-time buyers.

Help to Buy has certainly been successful in terms of sales, but it has repeatedly been accused of plumping up the value of new-build homes.

A Which? investigation in July 2020 found that one-in-seven people who had sold on a Help to Buy home did so for a lower price than what they originally paid. 

Our research found that between 2013 and 2019, the cost of Help to Buy homes bought by first-time buyers rose by 51%, compared to 39% on all new-build properties.

Since the price caps were introduced, the number of homes sold under the scheme has tapered off, as shown in the chart.

How do I find a Help to Buy home?

If you're thinking of buying a home using Help to Buy, your first port of call should be checking the website of your regional Help to Buy agent to find properties in your area. There are three agents, covering the North, Midlands and London and South of England.

The property portal Zoopla allows you to search for Help to Buy homes, as do specialist new-build portals What House? and Share to Buy. Rightmove allows you to search for new-build homes, but not specifically Help to Buy properties.

High-street estate agents sometimes include new-build homes in their listings, but you may have more joy searching for local developments online.

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 What other alternatives are available?

Help to Buy may be closing soon, but there are plenty of other ways first-time buyers can get on to the property ladder.

  • Low deposit mortgages: prospective buyers with a 5% or 10% deposit can currently get a two or five-year fixed rate mortgage with an initial rate below 3%. Taking out a standard mortgage means you won't get assistance from the government, but it also means you won't be limited to buying a new-build home.
  • First Homes: the government's First Homes scheme is likely to be the main successor to Help to Buy. The scheme allows first-time buyers in England to get a 30% discount when buying a new-build home. Councils can set their own eligibility rules (eg limiting properties to local buyers or prioritising key workers). The scheme has been piloted in several areas, and it's likely the number of available properties will ramp up as Help to Buy winds down. 
  • Shared ownership: shared ownership schemes can help you get on the property ladder in more expensive cities, such as London. Schemes allow you to buy a share of a property (usually from 25%) from a housing association and pay rent on the remainder. This allows you to get a foot in the door - but you'll need to do your sums, as the combined cost of your mortgage, rent and service charge can quickly add up. 
  • Guarantor mortgages: guarantor mortgages allow parents to help their child buy a home by using their property or savings as collateral.  

Help to Buy options around the UK

If you're buying your first home in Wales, you might be able to benefit from Help to Buy - Wales. As in England, the scheme allows borrowers to take out a 20% equity loan, and will run until the end of March 2023. New-build homes priced up to £250,000 are eligible.

Scotland's version of Help to Buy closed in 2021. Buyers can instead use the Scottish government's Low-cost Initiative for First Time Buyers. The scheme is split into two, depending on whether you're buying a home on the open market, or from a council or housing association. You can find out more on the Scottish government's website.