Impending changes to the help to buy scheme which are due to be implemented from April 2016 should give a significant boost to the housing market according to property experts.
Help to buy schemes enable you to buy a share of your home (usually between 25% and 75% of the house value) and then pay rent on the remaining share. This means you can buy a new-build or an existing property on a leasehold basis through a housing association resale programme. To do this you can either fund the purchase through your savings or take out a mortgage to cover whatever your share of the property purchase price is.
Under the current scheme you can buy a property if your household earns £60,000 a year or less (outside of London). In London the figures are £66,000 a year for a one or two bedroom property and £80,000 for properties of three bedrooms or more.
This scheme can be accessed by first-time buyers or former home-owners who no longer have the funds to get back into the property market. Priority is also being given to people who currently rent a council or housing association property and people who are in the Armed Forces.
What are the changes?
From April 2016 onwards, the help to buy scheme is changing its figures to benefit more homebuyers. Families with a household income of less than £80,000 outside of London and £90,000 inside London will be able to purchase a property through the revised help to buy scheme.
This should provide a much-needed boost for people who can’t get on to the housing ladder. First-time buyers often find it very difficult to save the large deposits required to buy a property outright and the new help to buy scheme has been designed to make things easier for them.
It will be interesting to see if this has the desired effect.