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First Time Buyer Scheme: Government’s Initiative

A wide range of Govt schemes are available for first-time homebuyers. With the help of those Govt schemes, the new buyers can buy a new home. Right to Buy and Shared Ownership are among the listed Government schemes that help the buyers to make a suitable choice. 

Not only buyers who are planning to own a house for the first time but also the existing homeowners can apply for the government schemes. Owning a home is indeed an expensive deal, but with the help of the Govt Schemes, it has become easier. 

Statistics show that a young person takes up to 18 years or more to attempt to buy a new home. This is where schemes come forth to help a person grasp their dream home.

Various Government Schemes for the First time Buyers

For first time home buyers, the Government is offering various schemes depending on their needs. There are certain criteria that one should monitor at the time of applying for these schemes. 

1. Help to Buy Scheme

“Help to Buy” scheme is applicable for those house owners who have a small deposit. Only first-time property buyers are eligible for this scheme. After applying for this scheme, one can buy or build a new house or apartment. 

The first time house buyers will get a refund of Income Tax and Deposit Interest Retention tax that they have paid for the past four years. 

Who Can Apply the Help to Buy Incentive?

To register under the HTB (Help to buy) Scheme, one need to be eligible for the criteria mentioned below:

  • The applicant needs to be a first-time buyer.
  • He/She needs to build the new property within the given period. 
  • They have to live in the newly bought property as their main residence for the coming 5 years. 
  • The first time buyers need to be tax compliant. 

To get into this scheme, one must not have any previously bought or built house or apartment. And the applicant can even apply for this scheme if he wants to share that house with another person.

If anyone has enlisted the property for the other person, it will not be considered as the limitation of the eligibility criteria. The first time buyers have to first sign a contract to buy property within the given time by the Government. 

Qualities of the Property:

All the properties do not fall under the “Help to Buy” scheme. To qualify under this scheme the property that you own or will build in the future need to meet certain factors:

  • The applicant’s own house.
  • The newly constructed properties should be subjected under Value Added Tax (VAT) (in some specific places). 
  • The property must be unused as per to qualify under HTB.

If the applicant has bought or built the property as an investment, it won’t get registered under the “Help to Buy” scheme. 

Requirements before Applying for HTB:

Certain basic requirements need to be checked by the applicant, before applying for the “Help to Buy” scheme, such as:

  • The first-time buyer needs to have an account in “myAccount ”. And the employees need to pay through “PAYE”.
  • And if the applicant is self-employed, he needs to pay tax through Revenue’s Online Service. 

How to login to HTB via my Account or Revenue Online Service?

If you are a first-time buyer and don’t know how to get into the My account or Revenue Online Service platforms, then it is recommended to follow these steps:

First, the user needs to upload the evidence of the mortgage. Then, he has to share the below-mentioned information on the web portal.

  • To buy a new home, a copy of the signed contract is required.
  • In case of building a home, the proof of the drawdown of the first part of the property. And, a copy of the valuation report from the lender is needed to get submitted.

In the portal, you will get to see the following options regarding the:

  • Property
  • Purchasing Price
  • Completion date
  • Mortgage
  • Amount of the deposit that the user has paid

Up next, all the information will be submitted on the Myaccount page. When you are done with submitting the above information, next the user should contact the developer or contractor. If the property is a self-build then the applicant has to contact the solicitor. 

How to Apply for “Help to Buy”?

The applicant needs to use the “myAccount ” or “Revenue Online Service” to apply online for the “Help to Buy” Scheme. The applicant needs to go through two simple yet easy online processes. 

Application Stage

The applicant can apply as an individual or as a part of a specific group to buy or build a property. In this stage, the first time buyers need to choose:

  • The year of the refund
  • For the complaints, the application will get approved instantly. 
  • The first time buyers will get a number and the maximum amount that they can claim.
  • Through inquiries, the first time buyers will get the 6 digit access code.
Claim Stage

The applicants can claim the benefits if they have signed the contract for the home that they owned. And if the property is the first part of the mortgage, then the individual can claim that property. 

The revenues can be refunded if the individual has the right to do so. Basically, if the first time buyers haven’t yet finished building the property. 

2. Right to Buy/Right to Acquire

Individuals eligible for this scheme are mainly the Tenants who have rented their homes from their respective local councils. All the council tenants can buy the council homes at a discount. 

There are certain criteria that the council tenants need to fulfil in order to buy a council home. 

Required Criteria

The first time buyers can apply for the “Right to Buy” scheme to buy the council homes if the below-mentioned criteria match with the requirements :

  • The council home needs to be his/her primary residing house.
  • The Property needs to be self-contained.
  • Applicants need to remain in the public sector for more than 3 years. 

Joint Applicant

The first time buyers can even apply for this scheme as a joint applicant. In order to be a joint applicant, the applicant needs to fulfil 2 basic characteristics:

  • He needs to have a tenancy.
  • It will be checked if the person has stayed with 3 family members for the past 12 months. 

Ex-Council Homes

The ex-council homes fall under the Right to Buy scheme. The homes that previously were owned by a council, but they have sold that property to the landlord while the person was living in it, may have the access to apply for the “Right to Buy” scheme.

Another Ways to Buy A Home

If nobody is residing inside the home when it was sold by the Council, then also the buyers are applicable to buy that property with the help of the “Voluntary Right to buy a Pilot” scheme. 

Discounts

The buyer will get a discount on the market value on the home if the requirements associated with the “Right to Buy” scheme are met. The discount will be provided on the basis of :

  • The time period that a tenant was holding the documents associated with the public sector landlord.
  • Nature of the property ( whether it is flat or house) that one will buy.
  • The home value.

The applicant has to repay the value of the houses if he sells the property within 5 years. And if you have already applied for the “Right to Buy” scheme previously, then the discount will get reduced. For such houses, the buyers will get a 35% discount and for the flats, the discount will be 50%. 

How can You Apply for the “Right To Buy” Scheme?

In order to apply for the “Right to Buy” scheme, it is necessary to follow up the below-mentioned steps:

  • Open the web portal of the “Right to Buy” scheme. Then, fill-up the form by providing accurate information that is required.
  • The applicant needs to mention the full address if the property that he wants to buy.
  • The name of the landlord is required. Provide the full names of the persons who are involved with the tenancy agreement.
  • Provide the names of the family members who want to share the price of the house.
  • Details of the current and previous tenancies are needed, with that, the signature of the tenants.  
  • The purchaser has to submit the form to their respective landlords.
  • The respective lenders need to provide their statements within 4 weeks. 

Appeals

The applicant can go to the tribunals if anyone restricts him from selling the property they own. He needs to appeal within 56 days after the council turns down the application. 

Delays

If the landlord does not share the required statements within the given time period, then the case turns in favor of the buyer. And if the tenants fail to state their answers within the limited time period, the buyer will get a price reduction in that case. 

To apply for the price reduction, the buyers need to fill up the “Initial Notice of Deal” form. After filling it up, the form needs to be submitted to the landlord. The landlord will then send the Counter notice to the applicant and at that time they need to share the reason for delaying the process. 

Regarding Selling of the House

The buyers need to sell the house within 10 years after buying it through the “Right to Buy” scheme. And then the applicant has to first offer to the Old Landlord. And then he should contact the social landlord of their perspective area. 

Paying back of the Discounts

According to the “Right to Buy” scheme, the applicants need to pay back a certain amount of discount within 5 years of buying it.

If the buyer sells the property in just one year, then he has to pay back all of the discounts that he got upon the time of buying. The total amount of paying back will reduce depending on the year selling the property. 

  • In the second year, the buyer will get an 80% discount.
  • In the third year, the discount will be 60%.
  • The discount will reach up to 40%, in the fourth year. 
  • And in the fifth year, the purchaser will get a 20% discount.

The amount of payback totally depends on the price value of the home when you are selling it. 

Rural Homes

The former landlord can put restrictions on who to sell the property if the home is near the few specific places, and the list includes:

  • National Park
  • And a place that has outstanding natural beauty.
  • An area that is rural as per the Government’s statement.

And it is not always necessary that all tenants need to be in the public sectors for 3 years. The time period can be reduced if the buyer is taking rent from the private sectors in between this time. 

3. Shared Ownership Scheme

As per Government, the “Shared Ownership” scheme is for the first time home buyers with a smaller mortgage and a low deposit. The purchasers can buy a share from the tenants who work for the association or Council. 

In order to get a mortgage, the buyers have to pay a share between a quarter and three-quarters of the house value. 

Eligibility Criteria

Certain criteria are needed in order to register under the Shared Ownership Scheme and that includes:

  • The individual needs to be a first-time buyer and his household’s income is £80,000 or less than that per annum.
  • The purchasers need to show proof that they can afford to buy the mortgage repayments and the rent payments as well. 
  • Certain groups are chosen mainly as property to this scheme, such as the people with disabilities and the Elderly.

Steps to  Apply for the Shared Ownership Scheme

In order to apply for this particular Govt Scheme, one must first check the eligibility criteria and then the buyers have to follow up the below-mentioned instructions:

  • Open the web portal of “Help to buy” websites.
  • Choose the correct region to apply for the local shared ownership scheme.
  • The website will take a while to approve the given information.
  • Next, the buyers will be directed to the Shared Ownership Scheme. 
  • Choose the property that you want to buy. The buyers can claim for already existing or new build apartments or homes. 

Advantages

Using Shared Ownership, an individual can get a great deal to rise up on the property ladder. The buyers can afford bigger homes and save on rent. In short, the buyers will save extra cash every month once they apply and start claiming the benefits of this scheme. 

What does the Shared Ownership Scheme deal With?

With the Shared Ownership scheme, the buyers are getting the option to buy a bigger share of the property even at a later date. This scheme is mainly focused on the people who don’t have enough money to buy properties overnight. Mosty, it is applicable to the rebuilt houses, the re-sold house, and the newly built homes. 

How Much a Buyer Need to Afford to borrow for a Mortgage?

In order to apply for a mortgage, one needs to have enough resources to pay monthly repayments. Mortgage providers will check the income before giving the property. The interest rate will vary depending on the time of the repayments. 

Chosen People for Shared ownership

As it is stated earlier only the people with disabilities and the Older People are listed on this scheme. 

  • People With Disabilities: For disabled people, Home Ownership for People with Long term Disability is there to help them to buy a home that is on sale. But this scheme is only applicable to those people who have long term disabilities. 

The first time buyers can apply for HOLD if the available property falls under any other social scheme and if it does not fulfill their required needs. Such as, if any disabled person needs land for an apartment or house but he is not getting it, then only he can apply for this scheme. 

  • Older People: The people whose age is 55 or over can apply for the Older People’s Shared Ownership scheme. This scheme works the same as the Shared Ownership scheme, but it is just the house owner who can buy 75% of his own home. Once the buyers own the 75 part of the house, he won’t have to pay the rent for the remaining 15% share. 

4. Shared Equity Scheme

The Shared Equity scheme is for providing first-time buyers a loan that will in the future become the part of the deposit of the property that the person intends to buy. The purchasers can take out the shared mortgage when they need it. With the help of the Shared Equity scheme, one can have all of the property that he owns. 

Criteria

The buyers can have community lands with the help of the Shared Equity scheme. Certain criteria are needed to apply for this scheme.

  • The purchasers need to have a low to moderate-income. 
  • Buyers need to have long term affordability to be applicable to this scheme.

The buyers can have the constructions that were built a year ago. Buyers can even sell the houses at a below-market price to the next buyers after applying for the scheme. 

How Does the Shared Equity Scheme Work?

Even though the name “Shared Equity” states that the buyer is sharing his property with another person, the property belongs to him only. This scheme mainly indicates that the buyer is taking out an equity loan for sharing his property. And in return, he is getting a deposit. 

And after getting a huge amount of deposit will enable the buyer to get hold of the cheaper mortgage deals. 

Divisions of the Shared Equity

Not only the Government is offering Shared Equity schemes to first-time buyers. But also the property developers are providing this offer to the common mass of the country who is aiding to sell the homes that they have built.

It’s just that the terms and the conditions of the Givts’s Shared Equity will vary from the Property Developer scheme. And this scheme is only applicable in some specific areas of the country. 

Advantages

The buyers who have low income can save a deposit for their first home or apartment. The greatest advantage of the Shared Equity scheme is that the buyer can rise up on the property ladder when the deposit reaches up to 5%. 

Easy Steps to Apply for the Shared Equity Scheme

With the help of the Shared Equity scheme buyers can buy a home, but to do that, they have to follow up the below-mentioned steps:

  • Go to the official web portal of “Help To Buy”. Check the available options from the website.
  • The buyers next need to check if the property is affordable enough or not. 
  • Next, they have to choose the accurate developer who will help them to buy equity loans.
Requirements

The interested buyers for sharing their equity need to look up to the Government’s “Help to Buy” schemes before applying the Shared Equity scheme. 

The buyer can repay the loan during the tie of mortgage or at the time of selling the property. The qualified buyers will get good credit instead of just a 5% deposit. 

Where the Buyers Will Get Mortgage?

The buyers will only be able to get the share of the mortgage if any lender offers the “Help to Buy” borrowers. The borrowers will check the available deals and in return, they will give a 25% deposit. But the deposit rate will vary depending on the market value of the house. 

The buyers always need to search for the possible deal for the mortgage and then they should invest in that. But before taking up any decisions the buyers need to take suggestions from their respective shared equity mortgage lenders.

Drawbacks of the Government Schemes

There are certain drawbacks associated with all the government schemes meant for first-time buyers. These include the bizarre interest patterns, the repayment process, lack of initiative of the banks, price booms, uncertain choices of the homes or the apartment.