Buying initiatives for first time buyers explained
July 21, 2022

Getting on to the housing ladder poses significant challenges for first time buyers in today’s market, with demand having driven property prices to record highs. However, there are a number of government initiatives in place to make saving for and purchasing your first home more achievable. In this blog we take a look at the different options available.

Lifetime Individual Savings Account

A Lifetime Individual Savings Account (LISA) can be opened by anyone aged between 18 and 39 and used to purchase your first home up to £450,000 in value. You can pay in up to £4,000 per year and the government will contribute a 25% bonus on top of the amount you deposit, up to £1,000 per year. However, you will have to pay a penalty if you make a withdrawal which you’re not using to purchase your first home or for your retirement.

Help to Buy ISA 

While it’s no longer possible to open a Help to Buy ISA, if you set one up before the scheme came to an end in November 2019, you can still use the account so long as you complete a purchase before December 2030. A Help to Buy ISA works very similarly to a LISA, where you receive a 25% government bonus on the amount you deposit each year, except the maximum amount you can pay in is £200 per month. The money saved in your Help to Buy ISA can be used on property purchases up to £250,000 (or £450,000 in London). 

Help to Buy: Equity Loan

This is an option for first-time buyers purchasing a new build home sold by a Help to Buy registered homebuilder. Under this scheme, you will only need a 5% deposit and can borrow up to 20% of the purchase price (or 40% in London) with an equity loan, which is interest-free for the first five years. There are a couple of conditions to be eligible. The property must be the only home you own and live in, and it must fall under the ‘maximum property purchase price’ limit, which is £600,000 in London and £437,600 in the South East. 

Right to Buy and Right to Acquire

If you live in a council house or are a housing association tenant, you might qualify for the Right to Buy scheme, which allows you to purchase your home at a discounted price. There are a number of criteria you’ll have to meet to qualify but if you don’t, the Right to Acquire scheme might be an alternative option. This can give you a discount of between £9,000 and £16,000 off the price of your property, depending on where you live in the UK.

Shared Ownership

Shared ownership homes offer you the option to buy a percentage of the property and pay rent on the remainder of the share you don’t own. Buying your share works in the same way as a traditional property purchase. You’ll need to pay a 5-10% deposit and take out a mortgage to cover the rest of the value of your share. You can purchase between a quarter and three quarters of the property’s value, with the option to “staircase” up to full ownership at a later date.

If you’re a first-time buyer taking advantage of an initiative to get on the property ladder, it’s important you choose a solicitor with expertise in carrying out these types of transactions as there are strict rules which need to be adhered to in order to ensure you get the bonuses and funds to complete your purchase. At Marsons Solicitors, our conveyancing team has in-depth knowledge of all these property purchase schemes and will ensure your matter progresses smoothly from start to finish. Learn more about our service here.

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