The recent property boom has seen house values soar bringing the average property value in England and Wales to £186,350. London in particular has seen the biggest increase with the average property costing £503,431. As a young professional myself, this doesn’t offer much hope in terms of getting onto the property ladder. With rental prices reaching record highs, what comfort can first-time buyers seek in the current climate?
We have seen the government announce several schemes over the past few years in an attempt to assist those looking to get their foot on the property ladder. In the recent Autumn Statement, George Osbourne announced further initiatives to support prospective buyers and here’s a brief overview of how some of them may help you:
Starter Home Scheme
The government has pledged to build 400,000 affordable homes by 2020. Up to 200,000 of these will be ‘starter’ homes which are available to first-time buyers with a discount of no less than 20% off the purchase price. The down side of purchasing under the scheme is that you cannot sell or rent the property at full market value for 5 years after the purchase.
Help-to-buy: mortgage guarantee scheme
Help-to-buy mortgage guarantee makes it possible to get a mortgage on a new or existing property up to the value of £600,000 with a deposit of 5% (as opposed to the 10% deposit usually required on exchange of contracts). The scheme is aimed at those who are struggling to save enough for a 10% deposit and is available to individuals who do not already own a property anywhere else in the world.
As announced in the recent Autumn Statement, the help-to-buy ISA is essentially a government backed savings account for first-time buyers. The account is operated in the usual way through a high street bank, however the government will boost your savings by 25%. For example, if you save £200 you will received a bonus of £50.00. The maximum government bonus you can receive is £3,000 per individual, so couples could receive a bonus of up to £6,000 towards the purchase of their property.
If you’re looking to buy a new-build home, under the current help-to-buy equity loan the government could lend you up to 20% of the purchase price which means you would only need a 5% deposit and 75% mortgage. It’s even better news for those looking to buy in London as in early 2016 the government will increase the loan available to 40% for properties in the city. The help-to-buy equity loan is available to first-time buyers as well as current homeowners.
So it’s not all doom and gloom for first-time buyers. Whether you’re looking to buy in London or another part of the country, the government has pledged to increase affordable housing and the above schemes could help you get onto the property ladder sooner than you think.