Homes England has said that first-time buyers can apply for the new Help to Buy Equity Loan scheme from 16 December 2020.
The new scheme will be available between 2021 and 2023.
As part of the new loan scheme, the government will lend homebuyers up to 20% (40% in London) of the cost of a newly built home.
Two thirds of FTBs feel it is ‘impossible’ to get onto housing ladder
Borrowers will need to pay a 5% deposit or more and arrange a mortgage of 25% or more to make up the rest. The equity loan is interest-free for the first five years.
According to Homes England, first-time buyers will be able to reserve their new-build homes from mid-December and get the keys to move in from 1 April 2021.
Robert Jenrick, housing secretary, said: “The government is providing more ways to help families onto the housing ladder, and provide that life-changing moment when you get the keys to your own home.
“Alongside First Homes, Shared Ownership and our £12bn investment in affordable housing, our new Help to Buy scheme will help thousands more families take their first step into a home of their own.
Furthermore, the scheme has regional price limits, set at 1.5 times the average first-time buyer price in each region in England.
Homes England believes this will keep the price of new homes closer to the average regional first-time buyer property prices, which will reduce the amount that first-time buyers need to borrow.
Homebuilders who agree to build properties designed for the new scheme must follow Consumer Code for homebuilders, the New Homes Ombudsman, the Building Safety Charter and fulfil planning permissions and building regulations.
They must also display their Home Builders Federation (HBF) star ratings when they advertise homes and give homebuyers a new home warranty before they complete their purchase, according to Homes England.
Will German, director of Help to Buy at Homes England, added: “Help to Buy has already helped more than 270,000 people into home ownership and 82% are first-time buyers. The new Help to Buy builds on this success with first-time buyers in front of mind.
“We are pleased we can help homebuyers with smaller deposits to own a home, at a time where there are fewer options open to them.
“Housing, like most sectors, has experienced a slowdown during the COVID-19 crisis. But Help to Buy continues to give homebuilders the confidence to keep on building at a more crucial time than ever.”