All the help currently on offer to first-time homebuyers
We had Yuppies flaunting their wealth decades ago but is the housing market now so bad that we’re producing Guppies — the under-40s who have Given Up on Property altogether?
Data from Halifax shows that the average deposit for those buying their first home last year was just over £62,450 — up 8 per cent on the average in 2021.
In London, it was an eye-watering £125,378, about a quarter of the capital’s average property price.
A survey by comparison service Uswitch claims the typical home in 25 per cent of England’s postcodes will be unaffordable to local buyers by 2025.
Out of reach: Zoopla says that over a third of those earning £60,000 or more annually have scrapped plans to buy in the next ten years
Zoopla says that over a third of those earning £60,000 or more annually have scrapped plans to buy in the next ten years.
Estate agency Hamptons states that young Londoners would have to move 25 miles outside the capital to afford a home on the basis of their average wage.
Little wonder Prime Minister Rishi Sunak is under pressure to reintroduce the Help To Buy Equity Loan Scheme, launched in 2013 and used by more than 350,000 people to purchase their first home.
Some said it inflated house prices before its end in March, but many expect an announcement at October’s Tory Party conference that it will return.
So in the meantime is there a way on to the ladder in this era of high house prices and high interest rates?
An obvious route is to apply to the Bank of Mum and Dad. Savills estate agency says 171,000 first-time buyers had family help with a deposit in 2022 — a fall on 2021’s total because fewer purchases were being made across the housing spectrum in response to rising interest rates.
If family help is unavailable or not enough by itself, there are several government schemes open to first-time buyers.
1. Mortgage guarantee
The Help to Buy Mortgage Guarantee Scheme ends in December and aims to boost the number of mortgages available with just a 5 per cent deposit.
Since its launch in 2021 there’s been a big rise in 95 per cent mortgages — not just from lenders in the scheme — and any type of home priced below £600,000 is eligible. More details at www.gov.uk.
2. First Homes Scheme
This sells new-build homes to first-time buyers at 30 to 50 per cent below market value. It operates in England only and is open to those earning below £80,000 (or £90,000 in London).
Some council rules vary and priority is given to key workers and those on low incomes.
First Home properties cannot cost more than £250,000 (£420,000 in London) after the discount has been applied.
But not all developers take part and critics say the scheme inflates asking prices.
3. Shared Ownership
This gives the opportunity to buy 25 to 75 per cent of a property with a mortgage and pay rent for the rest.
Over time you can increase your owned share up to 100 per cent.
Again this is mostly on new-build properties and different schemes operate in different parts of the UK. Most properties are in blocks or estates so have service charges too.
4. Rent To Buy
Homes are made available through housing associations at a discounted rent of 80 per cent of local market value, with the expectation that tenants can save the rest towards a deposit and buy a share of the property with a mortgage later on.
In most cases when you buy you get back 25 per cent of the rent you have paid plus half of any increase in the property value since you moved in.
This all goes towards your deposit. To be eligible your household must earn less than £60,000 a year.
5. Right to Buy
This scheme, introduced 35 years ago under Margaret Thatcher, still exists in England and if you are a council tenant you may be able to buy your house or flat with a discount.
The maximum discount, in London, is £116,200 but for most applicants the figure will be much lower.
6. Lifetime Isa
Nicknamed the Lisa, this account encourages first-time buyers to save for their home.
You can open one if you’re between 18 and 39 and contribute until your are 50.
Every year you can save up to £4,000, and the Government will add a 25 per cent bonus of whatever you put in, worth up to £1,000 a year.
