Government House Buying Schemes – What are they?

THE GOVERNMENT MORTGAGE GUARANTEE SCHEME

Announced during the 2021 Budget, the mortgage guarantee scheme offers lenders the option to purchase a guarantee on mortgages, where a first-time buyer can only submit a deposit of 5%.
This scheme is set to run until the 30^th of June 2025, and ensures mortgage lenders can get compensation if a buyer can’t make payments, and the home is repossessed. Notably, this scheme is only supported by some lenders. Before you can take advantage, you’ll need to find a property (costing less than £600,000) and find a mortgage company that accepts 5% deposits. Usually, working with a mortgage broker can help you find the best deal for your needs.

THE SHARED OWNERSHIP GOVERNMENT HOUSING SCHEME

“Shared ownership” is a popular government house buying scheme, which enables eligible buyers to buy a “portion” of a property and pay rent on the remaining share to a private developer or housing association. Usually, the rent you’ll pay is charged at a discounted rate, helping you to save cash.
This scheme makes buying a home more affordable, because you can start by buying as little as 25% of a property, and you only need to put down a 5% deposit on that share. You can generally increase your ownership stake in the property over time, until you own the home completely.
Notably however, the costs, restrictions, and details of each shared ownership scheme varies depending on your provider, so it’s important to read the small print.

It’s also worth noting that co-ownership schemes can differ in Ireland, Scotland, and Wales:

• Ireland: You can buy between 50 and 90% of a property and increase your share 5% at a time (known as staircasing).
• Scotland: Scotland has two shared equity schemes: Open Market Shared Equity, and New Supply Shared Equity, focused on first-time buyers and people on low incomes.
• Wales: To apply for the shared ownership scheme in Wales, you’ll need to find a participating landlord, and have a household income of less than £60,000 per year.

THE FIRST HOMES SCHEME

Great for single people purchasing a home for the first time, The First Home Scheme is another government house buying scheme that allows you to potentially purchase a property for 30-50% less than its market value. This program is only available to first-time buyers in England purchasing a new property, with less than £80,000 in annual income (or £90,000 in London).
You also need to be able to get a mortgage for at least half the price of the home, and the eligibility criteria for the scheme can vary depending on your location.
Some councils prioritise giving First Homes discounts to key workers, people who already live in the area, or people with extremely low incomes.
According to this guide on First Homes, buyers can save up to £70,000 on the price of buying a new home with this policy. However, this scheme won’t be an option for everyone.

THE HELP TO BUILD SCHEME 

The Help to Buy scheme might be gone, but the Help to Build Scheme is still available in England, Scotland, and Wales. The equity loan scheme is designed to help people get on the housing ladder when they’re building their own property.
You can apply for the loan to help you buy land and develop a property on it, create an “airspace development” flat, or convert a commercial property into a residential property. The Help to Build Scheme is also available for people who want to build a custom shell home (where a professional builds the structure and you handle the interior).
Plus, you can use the loan to demolish an existing property and replace it with a new home. However, in all cases, the new property needs to be your primary residence.
You can find out more about the Help to Build scheme, and how much you can borrow here.

GOVERNMENT HOUSE BUYING SCHEME: THE LIFETIME ISA  

The Lifetime ISA (Individual Savings Account) is a great resource for single people and couples alike. You’ll need to be between the ages of 18 and 40 to apply, but you can use the ISA to either save for your first home, or put money away for later in life.
If you have a Lifetime ISA, you can save £4,000 per year, and the government will add to your cash with a 25% bonus. Basically, that means you get a free £1,000 in your savings each year.
Just keep in mind, the money you save (£4,000 per year) counts towards your annual ISA limit. Plus, withdrawing your money can cost a lot if you’re not buying your home, or aged 60 or over. You’ll pay a 25% charge if you’re accessing the money for any other reason – unless you’re terminally ill, with less than 12 months left to live.
You can learn more about Lifetime ISAs on the official Gov.UK website.

RIGHT TO RENT AND RIGHT TO BUY   

The government housing scheme “Rent to Buy” allows you to rent a newly built home with the intention to purchase the property at a later date. The great thing about this scheme is you’ll usually rent the home at a cost that’s around 20% less than the standard market price for 5 years.
This means you can save for a deposit to put towards your first home. At the end of the first 5 years, a landlord can choose whether to extend your rental agreement.
The Rent to Buy Scheme isn’t available in Scotland, and it’s closed to new landlords in Wales, however, some properties may still be available. Northern Ireland has it’s own unique scheme, called “Rent to Own” which works in a similar way to shared ownership schemes.
“Right to Buy” is another similar option, specifically targeted on helping people living in council or social housing properties to purchase their home. This scheme is only available in England, and depending on where you live, it could help you buy your home with a discount of up to £87,200 or £116,200 in London.
You can only apply if you’re a secure tenant, and the council property is your only or main home. You can find out if you’re eligible to apply for this scheme here.

OTHER POTENTIAL GOVERNMENT HOUSE BUYING SCHEMES 

On top of all the options mentioned above, there are a handful of additional government housing schemes with very specific eligibility requirements. For instance:

• HOLD: The Home Ownership for People with Long-Term Disabilities (HOLD) scheme can support you in purchasing any home for sale on a shared ownership basis. Only military personnel get priority over other groups in this program, and the scheme only applies in England.
• OLDER PEOPLE SHARED OWNERSHIP: If you’re over the age of 55, you may be able to apply for a special version of the Shared Ownership Scheme, which allows you to purchase up to 75% of your home. Once you own this amount, you won’t pay rent on the remaining share.
• HOMEBUY: The Homebuy scheme in Wales helps people get on the housing ladder with an equity loan to purchase existing property. Generally, applicants are subject to various local residency and employment eligibility criteria.