The property market is dominating the headlines in the start to 2023. Whether it be interest rates, property prices or buying schemes, it can be overwhelming to understand what options there are for first time buyers in 2023. To help you understand your options, we have assembled this short guide.
Lifetime ISA
One government initiative available to help first time buyers is a Lifetime ISA. The scheme enables a first time buyer to save up to £4000 a year, which the Government will then add 25% of whatever is saved within the tax year. This means that you could receive an extra £1,000 a year for every year that the scheme is used. The money can only be used to fund your first home purchase, fund your retirement after the age of 60 or if you are terminally ill, otherwise you will lose the 25% bonus.
Shared Ownership
The Shared Ownership scheme is a government scheme that enables a prospective buyer to purchase a share of the property from a housing association, and then pay rent on the rest. Under the terms of the scheme, the buyer must purchase between 25% and 75% of the home’s full market value to be eligible for shared ownership. The payment of rent and the mortgage is proportional to the percentage of the property owned. Further shares of the home can be purchased at a later date through a process called staircasing. This would reduce the rent owed to the landlord.
First Homes Scheme
The First Homes Scheme was launched in June 2021, and is still in its early stages with very few available developments eligible for the scheme. The programme allows first-time buyers, local people and key workers to purchase the property at a discounted rate of between 30% to 50% of the market price. When the buyer decides to eventually sell the property, the discount is passed along to the next buyer, so that they can benefit from affordable housing.
Whilst Help to Buy ending was a blow to first time buyers, there are still incentives available to help first-time buyers to make their first steps onto the property ladder. If you would like to speak to a mortgage adviser to understand how these schemes could benefit you, our friendly team would love to help! Get in touch to start your journey today.