Buying a property is incredibly challenging. However, there is support available for first-time buyers and existing homeowners when you buy a new-build home.
Find out more about the different Government initiatives you can take advantage of, across different parts of the United Kingdom.
Once you’ve found the scheme that’s right for you, search our website for new-build homes here.
Stamp Duty Land Tax Discount for First-time Buyers
First-time buyers quality for complete exemption to Stamp Duty Land Tax (SDLT) in England on properties up to the value of £425,000. For any property greater than £425,000, first-time buyers will qualify for stamp duty relief at 5%, up to the value of £625,000. If a first-time buyer is purchasing a home for more than £625,000, then there will be no stamp duty relief at all, with the rates and thresholds of stamp duty being the same as any other home mover.
Here is an example of the stamp duty owed if you are a first-time buyer looking to purchase a property for £500,000.
- 0% on the first £425,000 £0
- 5% on the remaining £75,000 £3,750
- Total Stamp Duty Land Tax £3,750
For existing homeowners, the minimum threshold for paying Stamp Duty Land Tax has increased.
- For properties up to £250,000 0% SDLT
- For properties between £250,001 and £925,000 5% SDLT
- For properties between £925,001 and £1.5million 10% SDLT
- For properties over £1.5million 12% SDLT
Here is an example of the stamp duty owed if you are homeowner and you buy a house for £295,000.
- 0% on the first £250,000 £0
- 5% on the final £45,000 £2,250
- Total Stamp Duty Land Tax £2,250
Help to Buy: Equity Loan
The current version of the Help to Buy: Equity Loan scheme is due to come to an end on 31st March 2023. New applicants for the scheme have until the end of 31st October 2022 to reserve a new-build home. And applicants must legally complete on that home by 31st March 2023.
With not much time left to register and apply, here’s a reminder of the process.
You need your own 5% deposit, but you could borrow up to 20% of the cost of a new home (40% in London) by way of a government interest-free equity loan. The amount borrowed is interest-free for five years. The Help to Buy scheme is subject to regional price caps.
As follows,
South East - £437,600
London - £600,000
South West - £349,000
East of England - £407,400
West Midlands - £255,600
East Midlands - £261,900
Yorkshire & The Humber - £228,100
North West - £224,400
North East - £186,100
Once you have secured your deposit and equity loan (via Homes England), you will need a mortgage for the remainder of the property.
You can only use the scheme if you are a first-time buyer, and you are buying a new-build home. The property must be your main residence and cannot be used towards the purchase of a second home.
Find out more about the Help to Buy: Equity Loan here.
Help to Buy: Mortgage Guarantee Scheme
The government’s mortgage guarantee scheme was announced in the 2021 budget and is now scheduled to run until December 2023.
It is designed to increase the availability of 95% LTV mortgages from participating lenders to credit-worthy customers.
- The scheme is open to first-time buyers and homeowners.
- Using the scheme, you can get a mortgage with only a 5% deposit.
- A repayment mortgage is required for between 91% and 95% of the value of the property.
- The government promises to guarantee 15% of the mortgage if you were to default.
- You can buy any type of property (new-build or older property), as long as it costs less than £600,000.
- Applicants ought to have a good credit rating and a secure, regular income.
Find out more about the Mortgage Guarantee Scheme here.
Shared Ownership
The Shared Ownership scheme enables you to buy a share (between 25% and 75%) of a property and pay rent on the remainder to the building owner (landlord). You can either get a mortgage for the share you are buying or pay for it outright with savings. You will also need to pay a deposit (usually between 5% and 10%) of the share you are buying.
You will pay a discounted rent on the owner’s share and later on, you can increase your share in the property, thus reducing the amount of rent you pay. It is worth noting there might be other costs associated with Shared Ownership such as ground rent and service charges as all shared ownership properties (houses and flats) are leasehold.
Shared Ownership is available on both new-build homes and shared ownership resale properties.
To be eligible for shared ownership, the following must be true:
- Your household income is £80,000 a year or less (£90,000 a year or less in London).
- You cannot afford all of the payments (deposit and mortgage) for a home that meets your needs.
Thereafter, one of the following needs to be true about you.
- You are a first-time buyer.
- You were once a homeowner, but you cannot afford to buy a home now.
- You are starting a new household, perhaps after a relationship breakdown.
- You are already a shared owner and wish to move.
- You own a home, but you cannot afford to move to a new one that meets your needs.
Find out more about Shared Ownership here.
First Homes Scheme
Launched in 2021, the First Homes Scheme is available to first-time buyers and key workers in England. It offers those eligible, the opportunity to buy a new-build home at a 30% discount. The discount applies to the home forever, being passed on to the next buyers, and the next.
More and more homes are becoming available through developers, as part of the First Homes scheme. But you should also know…
- Applicants must have a household income of less than £80,000 per year (£90,000 in London).
- A minimum deposit of 5% is required, although this depends on the property and mortgage eligibility criteria.
- If new-build homes are being built in your area, check with the builder or developer whether they are currently offering the scheme on the development.
Find out more about the First Homes Scheme here.
Lifetime ISA (LISA)
If you are aged between 18 and 39 and resident in the UK, you can open a Lifetime ISA and use it to either buy your own home or save for later on in life.
With a LISA you can save up to £4,000 a year and the government will add a 25% bonus on each new payment you make. And if you are buying with a partner who also has a LISA, you can combine your savings and government bonuses.
The requirements of the scheme for buying a home are as follows:
- You must be aged 18-39 and a first-time buyer.
- The property you buy cannot exceed £450,000.
- You must buy your property with a mortgage.
- The property you buy must be your main residence.
- You must use a conveyancer or solicitor when making your property purchase, as they will receive the funds directly from the ISA provider.
- You must buy the property at least 12 months after you open the Lifetime ISA and start making savings.
Find out more about the Lifetime ISA here.
WALES
Help to Buy – Wales, Phase 3
Phase 3 of Help to Buy - Wales runs until March 2023, however the final date for reservations to be legally complete is 22nd December 2022.
New-build homes available within the scheme are now capped at £250,000. All new homes offered under the scheme will need to have provision for high speed broadband, and developers will be required to meet an ‘excellent quality’ standard for build and finish.
How it works
The Welsh Government provides a shared equity loan of up to 20% of the price of a new-build home in Wales, up to a figure of £250,000. Homebuyers will be required to provide a 5% deposit and take out a repayment mortgage to cover the remaining amount. The shared equity loan is interest-free for the first five years.
Find out more about Help to Buy - Wales here.
Shared Ownership – Wales
Shared Ownership – Wales allows you to buy an initial share of between 25% to 75% of the value of a property in Wales with a repayment mortgage, paying rent on the remaining share. The scheme is available to you if you have a combined household income of £60,000 or less each year or if you are unable to buy a property suitable for your family size on the open market. Only homes from participating landlords are eligible for the scheme.
Find out more about the qualification criteria and Shared Ownership – Wales, here.
Land Transaction Tax (LTT)
In Wales, you will not have to pay Land Transaction Tax (LTT) on a property costing up to £225,000.
Changes to the LTT were made on 10 th October 2022 and the new rates are as follows.
- For properties up to £225,000 0%
- For properties between £225,001 - £400,000 6%
- For properties between £400,001 - £750,000 7.5%
- For properties between £750,001 - £1,500,000 10%
- For properties over £1,500,000 12%
Find out more about the LTT rates in Wales, here.
SCOTLAND
Land and Buildings Transaction Tax (LBTT)
In Scotland, first-time buyers can benefit from Land and Buildings Transaction Tax relief. The nil rate band of LBTT is available on properties up to the value of £175,000. Thereafter and on properties up to the value of £250,000, the LBTT rate is 2%. The bands and rates for LBTT for first-time buyers on properties above £250,000, remain the same as for all other home buyers.
For existing homeowners, the nil rate of LBTT is valid on a property purchase price up to £145,000.
The rates of LBTT after that are as follows:
- For properties between £145,001 and £250,000 2% LBTT
- For properties between £250,001 and £325,000 5% LBTT
- For properties between £325,001 and £750,000 10% LBTT
- For properties over £750,000 12% LBTT
Find out more about the rates of LBTT in Scotland, here.
LIFT Open Market Shared Equity (OMSE) Scheme
If you can’t afford to buy your own home on the open market in Scotland, you can apply for the Low-cost Initiative for First-time Byers (LIFT) Open Market Share Equity (OMSE) scheme. As well as helping first-time buyers, the scheme is available for those over 60, those who are disabled, members of the armed forces and recent veterans. You need to be able to prove that you cannot afford to buy a home that meets your needs.
The scheme works by you paying for the largest share of the property (usually between 60% and 90%) and the Scottish Government helping with the rest. Your share will be covered by a mortgage (and a deposit at the request of your lender), with the remaining share being held under a shared equity agreement by the Scottish Government. Your name shall be on the title deeds for the property, but if you ever choose to sell the property, the Scottish Government will get a share of the money.
There are maximum thresholds set on the property prices available through the scheme and these vary across Scotland, so it is important you check these.
Find out more about the LIFT Open Market Shared Equity Scheme (OMSE) scheme here.
