The government has announced a new Help to Buy scheme to run from April 2021. It is restricted to first-time buyers and includes regional property price caps to ensure the scheme reaches people who need it most. There are no changes to the current Help to Buy equity loan scheme which runs to March 2021.
There are two main changes under the new Help to Buy arrangements. Firstly, the scheme is only open to first-time buyers meaning those who are looking to sell their current property and buy a larger home are now no longer able to apply. It is important to note that the official definition of a first-time buyer is somewhat different to what clients often perceive – it would perhaps be more appropriate to say ‘first-time owners’ as the question is not whether you have bought a property in the past, but whether you have owned any interest in land whether that be in the UK or overseas. If, for example, you have inherited a house in the past you are not a first-time buyer and will therefore be unable to use Help to Buy.
Secondly, the maximum purchase price is going to be reduced in all areas of the country except for London. From April 2021, the purchase price will be capped on a regional basis at 1.5x the average price paid by a first-time buyer in that area as calculated based on government figures from August 2018. The new maximum purchase price for each region is shown below.
North East: £186,100
North West: £224,400
Yorkshire and the Humber: £228,100
East Midlands: £261,900
West Midlands: £255,600
East of England: £407,400
South East: £437,600
South West: £349,000
Our clients who are purchasing a home in London will be unaffected by the regional changes as the cap has remained unaltered under the new method of calculation. However, those who are looking to buy a new build home in Dorking and other areas throughout the South East will see a 27% reduction in the maximum purchase price.
If you are looking to move to a larger home using Help to Buy you would need to do so before the scheme is restricted to first-time buyers. Similarly, if you are considering using Help to Buy outside London and the purchase price is likely to exceed the new regional limits you would need to do so before the changes are implemented.
If you have any queries regarding Help to Buy or any aspect of buying a New Build Home, please contact Stephen Carr on 01306 884432 or email firstname.lastname@example.org
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