The government is trying to encourage more housing development through a number of different schemes, according to Jeremy Leaf, north London estate agent and a former RICS residential chairman.
These schemes are set to be reinforced as part of the levelling-up agenda, created by the government.
For instance, Leaf pointed to Homes England, which will provide investment loans and infrastructure funding, especially to SME developers via the Home Building Fund.
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The government is also aiming to deliver more affordable, secure and greener homes for families across the country.
There is £7.1bn available within the National Home Building Fund and more than £12bn being invested through the Affordable Homes Programme.
Help to Build, on the other hand, is aimed primarily at self-builders or those wanting to build their own home.
You can apply for Help to Build if you are 18 years of age or over, and have a right to live in England, will live in the newly-built home as your only home, or you secure a self-build mortgage from a lender registered with Help to Build, explained Leaf.
Most lenders will need you to have outlined planning permission for the land you want to build on before they will assess or approve your self-build mortgage.
Leaf said: “The most significant assistance, as far as the house building industry is concerned, has probably been Help to Buy.”
Since April 2021, this scheme has enabled first-time buyers to take advantage of equity loans on favourable terms, providing they can contribute at least 5% towards the purchase price of a new-build property.
In order to qualify for this a customer would need a minimum 5% deposit, and in turn the government will lend you up to 20% of the property’s value, or 40% if the home is in London.
Following this, you will need to secure up to a 75% repayment mortgage from a bank or a building society
It is also worth noting that the scheme is only available on new build homes and it is exclusively for first-time buyers.
Leaf went on to explain that as far as he has seen on the ground, the scheme has proved especially popular, not just for aspiring homeowners but for developers too.
“The only problem is that Help to Buy is due to end in March next year and is already resulting in some schemes being put off unless a sufficiently-robust alternative is put in place,” added Leaf.
Shared ownership is another popular option favoured by first-time buyers, but not just for new-builds, but as a lower barrier to home ownership. The scheme is designed to help people with small deposits and lower incomes get on the property ladder.
You buy a stake of between 25% and 75% of the property from a housing association, and pay rent of up to 3% on the remaining share.
You typically need to put down a minimum 5% deposit, but that is only on your share rather than the total property price.
However, Leaf explained: “Nevertheless, entry and exit are not particularly straightforward which has meant the scheme is not as popular as it might be.”
In addition, shared ownership is only available to first-time buyers, those who have previously owned a home but cannot afford to buy one now, and existing shared ownership homeowners who want to move house.
According to Leaf, the mortgage guarantee scheme, which helps buyers obtain 95% loan-to-value (LTV) funding, has also been helpful in the past but it comes with a limited shelf life as it is due to finish by the end of this year.
The mortgage guarantee scheme involves the government ‘guaranteeing’ 95% mortgages for buyers with 5% deposits.
The scheme is quite similar to the Help to Buy mortgage guarantee scheme, which ran from 2013 to 2016 and was used by 105,000 buyers.
Looking forward, Leaf said: “It is Help to Buy or another scheme offering similar advantages, which is what most first-time buyers in particular will be looking out for.
“The government would do well to make sure something similar is in place in good time. If it does not, the consequences for transaction numbers, not just in the Red-Wall seats, but other parts of the country, could be quite significant.”