The latest version of the help-to-buy equity loan scheme opened on Wednesday, with first-time buyers now the only people allowed to apply for government assistance to get on to the housing ladder.
The scheme, which allows buyers to borrow up to 20% of a new-build property’s value, or 40% in London, will no longer be available to movers and is subject to new regional caps on prices.
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In London, it can still be used to buy a property costing up to £600,000 but in the rest of England prices will be capped at 1.5 times each region’s average first-time buyer house price.
In the north-east, for example, the maximum property price it can be used on is £186,100, while in the east Midlands it is £261,900.
More than 270,000 properties were bought with the first version of the scheme between April 2013 and 31 March 2020, with first-time buyers accounting for 82% of purchases, but there were concerns that help was not being targeted at those who most needed it.
The loans granted through the scheme are interest-free for the first five years. Buyers pay a reservation fee of £500 and need to raise a deposit of at least 5% of the property’s value.
The loans can be repaid at any time but must be settled when the home is sold or the mortgage is paid off.
First-time buyers who sign up will be able to move in from 1 April 2021. This version of the scheme is set to close in 2023.