Logo

Author: bj4rtqwx1ccz

Property Prices & Market Expectations Less Negative in May than Previous Months

Posted on by bj4rtqwx1ccz

The Royal Institutions for Chartered Surveyors (RICS) have expressed a more positive outlook for house prices, despite rising interest rates that are expected to impact buyers’ affordability. RICS’s reported that new buyer inquiries, prices, and expectations for the market were all less negative in May compared to previous months.

Despite their positive outlook for the property market, RICS warned that an increase in mortgage rates could constrain the market in the future.

While new buyer inquiries registered at minus 18% in May, the least negative reading in a year, the measure of house prices rose to minus 30%, marking the third consecutive increase.

 

Surveyors were neutral about the outlook for prices over the next year.

This contrasts with reports from mortgage lenders Nationwide Building Society and Halifax, which have shown a decline in house prices.

Mortgage rates have risen recently due to higher-than-expected inflation, causing concern that it may weigh on the market.

RICS noted that the banking sector expects this, as many banks and building societies have already introduced products with higher interest rates.

While economists have warned of a potential 10% slump in property prices this year, limited supply and a strong labour market provide some support.

RICS’s report also indicated an increase in houses coming to the market, with new instructions to sell property reaching the strongest level since March 2021.

David Hannah, Chairman at Cornerstone Group International, discusses the current state of the property market:

“While surveyors are showing a slightly more positive outlook for UK house prices, the looming threat of rising mortgage rates is likely to dampen the market in the coming months.

Stubbornly high inflation is expected to trigger further interest rate increases, leading to higher mortgage rates and reduced affordability for buyers.

The recent increase in mortgage rates, driven by higher-than-expected inflation, has already reached the pain threshold for consumers.

However, I remain confident in the UK property market. Historically, it has been more stable than any other global property market.”

Source: Property Notify

The Specialist Lending Sector is on An Upward Trend: Here’s Why

Posted on by bj4rtqwx1ccz

The UK’s property market and the lending landscape have undergone an exceptionally turbulent period.

Inflation has remained in double figures, while the Bank of England has embarked on a rate hiking cycle that has culminated in a rapid rise in interest and mortgage rates.

Consequently, during the fourth quarter of 2022, numerous lenders opted to temporarily halt or withdraw their products.

This cautious approach prompted homeowners and investors to put their purchasing plans on hold, resulting in a noticeable decline in house prices. Nevertheless, despite the ongoing economic challenges faced by the industry, there are indications that the property market is gradually stabilising: prices are starting to show signs of growth, while the level of activity suggests that the market may be on the rise.

As more buyers and borrowers resume their plans, the specialist finance sector is expected to experience a substantial surge in demand in the coming months and years, with the specialist mortgage market alone projected to reach a value of £16 billion by the end of the decade.

Already, as borrowers’ requirements continue to evolve and the demand for flexible financial products increases, homeowners and investors are turning to alternative sources of finance for their investments in the UK property market.

For instance, in the first quarter of 2023, recent data revealed a remarkable surge in bridging loan transactions, reaching record-breaking levels with a 68% increasecompared to the previous quarter.

This clearly demonstrates the strong demand for more flexible financial products that may not be readily available from traditional high street lenders.

With this in mind, the specialist lending market appears to be on an upward trend.

Flexibility and adaptability are key in the current market

Undoubtedly, the current economic environment poses significant challenges for borrowers.

Despite a recent decrease to 8.7%, inflation remains a concern, causing the value of borrowers’ money to erode in the prevailing climate.

Additionally, while the Bank of England has indicated that interest rates are approaching their peak, further rates are still likely.

As such, the rapid increase in borrowing costs since December 2021 continues to exert financial strain on borrowers, deterring some investors from proceeding with their investments in the UK property market.

Regrettably, the persisting economic headwinds hinder both investors and homeowners who aspire to capitalise on the ongoing opportunities within the UK property market, especially because borrowers are unlikely to discover the flexibility and optionality they require from traditional high street lending channels.

Certainly, the recent upheaval in the mortgage market has compelled many high street banks to tighten their lending criteria.

This, in turn, has led to the adoption of even more stringent tick-box methodologies for assessing loan applications.

As a result, homeowners and investors with intricate financial situations will encounter greater difficulty in accessing financial products from mainstream lenders in the current climate.

Therefore, in order to make investments in the property market more accessible, the specialist lending sector has a vital role to play in providing the flexibility and adaptability that borrowers need to invest with confidence.

Lenders who can provide flexibility and certainty should see demand grow

Naturally, lenders have had to adjust their rates in line with the Bank of England’s base rate.

However, even as they do so, there are numerous ways in which they can support borrowers during these uncertain economic times.

Offering certainty in an unpredictable climate is an excellent starting point.

For instance, borrowers experiencing cash flow challenges or concerns about meeting repayment obligations would greatly benefit from lenders who can provide fixed-rate repayment terms spread over an extended period.

By providing such solutions, lenders can alleviate some of the financial pressures faced by borrowers.

Delivering high-quality customer service is another way of supporting borrowers in the current climate.

Given the circumstances, investors will inevitably have numerous inquiries when engaging with lenders about their products.

As such, lenders who can effectively and transparently communicate how their products may be influenced by the economic situation will prove to be of the most value to their clients.

By addressing clients’ concerns and providing clear information, lenders can establish trust and foster strong relationships with borrowers, imbuing a much-needed sense of confidence in the market.

Elsewhere, by taking a more flexible and holistic approach to considering loans, lenders can support those borrowers with the most complex of applications, giving them access to financing and enabling a broader spectrum of homeowners and investors to participate in the UK property market.

This, in turn, is expected to bolster the demand for specialist finance products in the near-term future.

The ability to approach each client as a unique case is especially advantageous for lenders operating in the prime central London market.

With a significant proportion of foreign investors, borrowers tend to encounter challenges in securing the loans they require through traditional high street lenders.

Notably, the super-prime postcodes in London have witnessed a resurgence in activity, reaching levels comparable to the pre-Brexit era.

The demand from this subset of the market should expand in the future if lenders can meet their needs.

Likewise, the demand in the prime central London (PCL) market is significantly driven by high-net-worth individuals who frequently possess valuable assets such as real estate, fine art, or luxury vehicles.

These assets can be utilised as collateral for loans but are not often accepted by lenders with a rigid tick-box approach.

Therefore, specialist lenders are well-positioned to evaluate the unique circumstances of each borrower, enabling them to offer personalised lending solutions that align with the borrower’s overall financial situation.

Concluding thoughts

As the recovery of activity levels and the resumption of price growth in the property market continues, a growing number of homeowners and investors will be eager to engage with lenders about increasing their activities in the UK property market – but they’ll expect a high level of flexibility, certainty, and customer service.

As such, while the specialist lending sector appears to be on the rise, it is crucial not to become complacent and we must continue to explore innovative approaches to supporting our clients and meeting their ever-evolving needs in the current economic environment.

Source: Property Notify

An Important Time for the Mortgage Rate Outlook

Posted on by bj4rtqwx1ccz

The Bank of England has raised interest rates 12 times since the end of 2021, a record run, as everybody is surely aware.

Few expected this before it happened, either among forecasters, in the financial markets, and among mortgage borrowers.

Nearly 15 years of near-zero interest rates had made this seem like the norm.

To illustrate this, I recently came across a column I had written for The Sunday Times on October 31, 2021, headlined “A Scary Halloween Story on Inflation and Interest Rates”.

This, written when Bank Rate was still an all-time low of 0.1%, reflected on new predictions from the Office for Budget Responsibility (OBR).

Its main forecast then was that the official rate would soon rise to 0.75% and stay there for three years, thus continuing the pattern of low rates seen since the 2008-9 financial crisis.

But the OBR also offered an alternative scenario, if inflation proved to be more of a problem.

Under this one, and this was the scary bit, Bank Rate would rise to the heady heights of 3%, a rate not seen for well over a decade.

So scary did it seem, in fact, that few believed it would ever happen.

It did, and more.

Bank Rate is now 4.5%, having got there in both small and large steps.

The smallest was 0.15%, as the Bank dipped its toes into the water in December 2021.

The largest, 0.75 percentage points, was in November last year. Reflect on that.

The maximum rate between March 2009 and the spring of last year was 0.75%. In one got, the Bank had raised by that much, and a coupe of half-point hikes followed.

Mortgage rates do not follow official interest rates as closely as they used to, because of the shift to fixed rate mortgages.

Even as Bank Rate was rising last winter and this spring, mortgage rates came down from the giddy heights they had reached in the wake of the Liz Truss-Kwasi Kwarteng min budget in September last year.

The mortgage market has, however, now started to reflect concerns about where Bank Rate will peak.

Rates are edging up again, with a typical two-year fix on 90% loan to value up to 5.12%, and a five-year fix up to 4.79%, both slightly higher than they were before the Bank’s latest rate rise on May 11.

At the end of April, these typical rates were 5.04% and 4.67% respectively.

So this is an important time.

The next decision from the Bank of England’s monetary policy committee (MPC) is not until Thursday June 22.

Before that, there will be two new inflation figures.

The first, on Wednesday (May 24) this week, covering April, is expected to show a significant fall in inflation.

Taking it comfortably into single figures, as a result of some of the energy price hikes dropping out of the 12-month comparison.

The next reading will come on June 21, the day before the MPC’s next decision.

The key question is not what happens to “headline” inflation, which definitely should fall significantly this time after a couple of disappointments.

If it does not, we really do have a problem.

The question is what happens to so-called core inflation, excluding energy and food.

It needs to show evidence of a fall before the Bank can start to relax.

That is not the only important indicator affecting the outlook for interest rates.

The Bank is concerned about the growth in wages.

In the latest official figures, its dilemma was laid bare.

The number of people off company payrolls fell sharply in April but pay growth was strong, with regular pay up by 6.7% on a year earlier in the latest three months, and by 7% in the private sector.

Total pay growth, including bonuses, was lower at 5.6%.

The question MPC members will be asking will be whether, if inflation falls as they expect, pay rises will also head lower.

We are clearly getting the near the peak in interest rates.

Andy Haldane, the Bank’s former chief economist, agrees with two members of the MPC, Silvana Tenreyro and Swati Dhingra, that rates should not go up any further.

The majority on the MPC is not so sure.

The sooner that peak is reached and we can begin to look over the hill to eventual rate reductions, the better.

Source: Property Notify

Nationwide Offering 0% Loan for Green Home Improvements

Posted on by bj4rtqwx1ccz

Nationwide Building Society is increasing support for mortgage members improving the energy efficiency of their homes by reducing the interest rate on Green Additional Borrowing to zero per cent.

The new 0% Green Additional Borrowing products, which will be available from Thursday 1 June, will enable up to 5,000 households with a Nationwide mortgage1 to borrow £5,000-£15,000 up to a maximum of 90 per cent Loan-to-Value (LTV) across the two or five-year product term2.

With the UK’s 29 million homes producing some 16 per cent of the country’s emissions and a commitment to reach the net zero target by 2050, Nationwide’s approach aims to contribute towards that goal through retrofitting properties.

While Nationwide has limited ability to reduce emissions on the properties it lends on, it hopes that by removing interest on its Green Additional Borrowing products, it can effect positive change by incentivising members to make green home improvements.

For example, if a member borrowed the maximum £15,000 over a five-year term, the monthly payment on the existing Green Additional Borrowing product at a rate of 3.89% would be £275.50.

For those taking out the new version, the payment would reduce by £25.50 per month to £250, meaning the member would save £1,530 over the full term of the deal.

The new Green Additional Borrowing home loan3 is available via Nationwide’s mortgage advisers as well as brokers.

All of the loan must be used to fund non-structural, energy-efficient home improvements4, such as solar panels, air source heat pump, window upgrades, boiler upgrades, cavity wall insulation, loft insulation or an electric car charging point.

Members can use any local or national contractor or supplier for the work.

The previous version of the Society’s Green Additional Borrowing product will be withdrawn from sale at 23:59 on 31 May 2023.

Henry Jordan, Director of Home at Nationwide Building Society, said:

“Residential properties are one of the biggest causes of emissions and there is a need for more to be done by government and business to encourage households to act.

A key barrier to making homes more energy efficient is not only the upfront costs associated with retrofitting, but also the payback period of making such changes.

It’s clear to us that only meaningful incentives will help shift behaviour.

So, by launching this latest product for up to 5,000 of the Society’s mortgage holders, we can test and understand whether offering zero per cent interest will encourage members to make the necessary green home improvements, where the costs of finance may have, until now, discouraged them.

As a mutual, we’re committed to returning value back to our members, which is demonstrated by this being the first time we’ve taken this approach.

Creating a greener society is a shared goal and we need to make it as easy as possible for households to play their part.”

Mortgage Technical Manager, Nicholas Mendes, from leading UK mortgage broker, John Charcol, comments:

“While there are other lenders that offer similar schemes, such as Skipton Building Society and Saffron Building Society, none of these are currently at 0%.

Sustainable lending is a hot topic at the moment, with consumers taking a vested interest in how they manage their money – but also the credentials of financial institutions they choose to engage with.

With the government’s net zero pledge, and greater focus on a lenders’ role in educating, promoting and helping customers invest in their homes to become more sustainable, this is a fantastic move by Nationwide.

Source: Property Notify

The Government’s Levelling Up Plans: Are There Certain Areas Worth Investing In?

Posted on by bj4rtqwx1ccz

In March’s Spring Budget, the Chancellor announced a raft of measures that the Government intends to help ‘level up’ the UK.

This involves addressing the challenges faced by areas currently underperforming economically and building on areas of strength, “ensuring the benefits of economic growth are felt across the UK”. The focus will be on “supporting growth in the sectors of the future”, namely: green industries, digital technologies, life sciences, creative industries, and advanced manufacturing.

How does this relate to the property market?

When investment is made into the infrastructure and economy of an area, it attracts businesses and creates employment opportunities, which can, but not always, boost the demand for housing.

And if this generates more wealth and the desirability of an area increase, that can drive up prices and rents and create new property investment opportunities.

So, for property owners and landlords, it’s well worth being aware of which areas are being targeted for Government and institutional investment because the earlier in the process you can take advantage of property investment opportunities, the better your medium to long-term returns could be – both in terms of equity growth and rental profits.

Where can I find out about levelling up funding for my area?

More details on the above can be found in the Spring Budget policy paper on the GOV.UK website.

To find out about specific plans for your area – or an area you might be considering investing in – you can visit the local council planning department, which will have details on infrastructure changes and any new commercial and residential buildings.

Source: Property Notify

The 100% Mortgage for England’s 4.6m Renters

Posted on by bj4rtqwx1ccz

Tuesday (9th May) saw Britain’s fourth biggest mutual, Skipton Building Society, launch its 100 percent Track Record Mortgage to help the 4.6million households across England, who are privately renting, get onto the property ladder without a deposit.

This move marks the first 100 percent home loan exclusively for renters and has been described by some commentators as a “revolutionary” way to help those trapped in the rental cycle get on the property ladder.

The mortgage is open to first-time buyers who are currently renting and allows them to borrow up to 100 percent of the value of a property (subject to passing the lender’s affordability criteria).

Naturally, others are not very optimistic about this product, with some warning that it is not too dissimilar to the risky loans that contributed to the 2007-08 financial crash.

More negativity surrounding today’s property press includes the Halifax’s report that average UK house prices fell in April, by 0.3 percent month on month; threats of negative equity; Thursday’s rumoured interest rate increase; Purplebricks’ struggle; and, the fall in some housebuilders’ share prices.

Regardless of where you stand, a 100 percent mortgage is a facility that may allow people who rent to become homeowners.

The number of private renters in England is currently double what it was in 2000 and 80 percent of tenants feel ‘trapped’ in renting, paying rents that are higher than a mortgage which then prevents them saving a deposit to buy their own home.

Skipton is addressing the barriers to homeownership with what is a solution to a problem.

The Building Society has recognised that there is a gap in the market for people who have a strong history of making rental payments over a period of time and can evidence affordability of a mortgage – but for whom there is currently no solution to buy a property due to lack of savings or access to the bank of mum and dad.

The threat of negativity equity is a big one as even a small fall in house prices could put those who sign up into negative equity, potentially trapping people in properties worth less than their mortgages.

It is important that borrowers understand why and how this product is different.

A ‘no-deposit’ mortgage was commonplace before 2008, at which point they were axed and tighter rules were introduced on who can get mortgages and how much they could borrow.

On reading about the mortgage, there are several obstacles that prospective homeowners need to overcome to qualify for the 100 percent deal.

For example, the monthly mortgage payment must be equal to or lower than the rent they are used to paying.

So, tenants paying an average of £1,000 a month over the last six months will have a maximum monthly mortgage payment of £1,000, and this will also determine the maximum amount that can be borrowed.

Standard mortgage affordability requirements must be met, applicants must be over the age of 21, and credit score checks must be passed in addition to evidence of a minimum of 12-months’ good track record rental history.

The mortgage is a longer-term product – a five-year fixed-rate deal – which is designed to mitigate volatility, and the 5.49 percent interest rate is pricier than the current average new five-year fixed-rate, which is about 5 percent.

The mortgage has a maximum term of 35 years and buyers will be able to borrow up to 4.49x their income up to a maximum total loan of £600,000.

There are other 100 percent mortgages on the market, however, these generally come with a requirement of a guarantor and are labelled ‘family assisted’ mortgages such as the Barclays Family Springboard mortgage.

Source: Property Notify

Confidence is Up, But Higher Interest Rates Are Biting

Posted on by bj4rtqwx1ccz

This is an interesting spring for the housing market.

For every negative indicator, there is usually a more positive one and, while conditions have clearly improved in comparison with the panic of last autumn, housing is still adjusting to the higher interest rate environment. That adjustment is still underway.

One positive in recent days came with the news that consumer confidence, while still at historically low levels, is on the up.

The closely watched GfK consumer confidence index rose six points this month, its third increase in a row. Every measure in the index showed a rise.

Perhaps most significant for the housing market was a rise of eight points in how people see their personal financial situation over the next 12 months, and an increase of five points in the major purchase index, which measures whether respondents see this as a good time for a big purchase.

“There’s a sudden flowering of optimism with big improvements across the board,” said Joe Staton of GfK.

“The eight-point jump in how we see prospects for our personal financial situation is a dramatic change that might suggest household finances are stronger than we thought.”

This is good news, coming as it does before the cost-of-living squeeze is over.

It may reflect the fact that the winter was not as bad as feared, so a collective sigh of relief.

Source: Property Notify

Tax Changes from April 2023: What Landlords Need to Know

Posted on by bj4rtqwx1ccz

Over the last couple of years, the Government has made several changes to how income and profits are taxed.

Some of these will take effect from the new tax year on 6th April, with higher earners and those letting via a limited company most affected.

Here’s a round-up of what you need to know for this year as a landlord and property investor.

Corporation Tax is rising for companies with profits above £50,000

If you let your properties via a limited company and have annual profits of more than £50,000, you need to be aware that the rates are rising.

Currently, Corporation Tax is 19%, but this is increasing to 25% from April for companies with profits above £250,000. Profits between £50,001 and £250,000 will be taxed at a graduated rate through marginal relief applied to the 25% rate, while companies making up to £50,000 in profit will continue to be taxed at 19%.

Dividend Allowance reducing

If you receive dividend income from shares, you need to know that the tax-free allowance is being cut from £2,000 to £1,000 for the 2023/24 tax year and then to £500 for the 2024/25 tax year.

Personal Allowance remains at £12,570

While this isn’t a change for 2023, it is a change from the norm.

Usually, the Personal Allowance goes up each year to reflect inflation in order to maintain the value of the allowance.

But to help recoup some of the money spent on the pandemic, the Chancellor froze the Personal Allowance at the 2021/22 level – initially for five years until 2026, which was extended to 2027/8 in last November’s Autumn Statement.

So, for the third year, the amount you can earn before paying tax in 2023/24 is £12,570.

Unfortunately, this means that over the next few years, as the cost of living rises through inflation, the real-world value of your tax-free allowance will continue to fall.

Top rate tax threshold dropping from £150,000 to £125,140

From April, the additional rate tax threshold is dropping to £125,140, and earnings over that level will be taxed at 45p.

So those earning over £150,000 will pay 5p more in tax on £24,861 and see their tax bill rise by £1,243.

For more information on allowances, income tax rate, and bands, visit the GOV.UK website.

Capital Gains Tax annual exempt amount being cut

If you plan to sell property soon, you must budget for the CGT tax-free allowance to drop significantly over the next two tax years.

For 2023/24, it’s being reduced from the current £12,300 to £6,000, in April 2024, it will drop again to £3,000.

That means for anyone with gains above the allowance, CGT will be payable on an additional £9,300 by the 2024/25 tax year – that’s an extra £1,674 on the tax bill for basic-rate taxpayers and £2,604 more for those in the higher-rate bracket.

Here’s an example of how your tax bill for a gain of £40,000 would change:

Tax year reported Tax-free Taxable Tax at 18% Tax at 28%
2022/23 £12,300 £27,700 £4,986 £7,756
2023/24 £6,000 £34,000 £6,120 £9,520
2024/25 £3,000 £37,000 £6,660 £10,360

Finally, here’s one more change to be aware of:

Making Tax Digital (MTD) plan amended

This online-only tax filing system was originally due to take effect in April this year for those who earn over £10,000 and submit Self Assessment returns.

However, the planned introduction was delayed by a year due to the impact of the pandemic, and then, in December 2022, the Government changed its plans for MTD again.

As it now stands, self-employed individuals and landlords will have to submit quarterly returns to HMRC via MTD-compatible software:

  • From 6th April 2026, if their annual property or business income is more than £50,000
  • From 6th April 2027, if they earn between £30,000 and £50,000

A pilot scheme is already underway, so if your income is above £30,000, it might be worth looking into the available software options and speaking to either your financial adviser or a property tax expert to ensure you’re prepared for when the requirement comes into force.

Those earning under £30,000 will not be required to use the MTD system until a Government review has been completed.

It’s essential to protect your rental profits by controlling your costs and aiming to increase your tenants’ rent each year.

Source: Property Notify

First-Time Buyers: What Schemes Are Available to Help People Pave the Way to Home Ownership?

Posted on by bj4rtqwx1ccz

The number of UK first-time buyers dropped by 11% in 2022 and the average deposit requirement increased to almost £62,500.In addition, average property values for first-time buyers grew to around 7.6 times the average UK salary and the average two-year fixed mortgage rate has nearly doubled from 2.85% to 5.35% in the past year.

The Help to Buy scheme has recently ended, making it harder for first-time buyers with smaller deposits to buy.

Under the scheme, the Government provided a 20% loan (40% in London) that was interest-free for five years and allowed buyers to get on the housing ladder with just a 5% deposit.

So, how can first-time buyers in England navigate the journey of buying a house and take steps to try to mitigate any negative financial impact of the process?

There are several available schemes, as stated on Own Your Home, and in my view, these aren’t talked about enough.

Whilst these schemes are available, it is important to take the time to understand the eligibility criteria of each scheme and what the terms of the schemes are.

Stamp Duty Land Tax (SDLT) Relief

Benefit: Stamp Duty Land Tax relief for people buying their first home.

Requirements: Purchases of residential property of £500,000 or less by first time buyers.

SDLT is a tax to pay if you buy a property in England or Northern Ireland and different rates are charged on the portion of a property’s value within price bands. First-time buyers are eligible for a stamp duty relief if they purchase a property of £500,000 or less that they intend to use as their main residence. First-time buyers who buy a property between £300,000 and £500,000 pay SDLT at a rate of 5% on the amount above £300,000.

Property Value SDLT rate for first time buyers
£0 – £300,000                                                 0%
The next £200,00 (the portion from £301,001 to £500,000)                                                 5%

The Mortgage Guarantee Scheme

Deposit needed: 5% deposit

Requirements: Available from participating lenders across UK on properties with a purchase price of £600,000 or less, where a borrower has a deposit of 5%.
Available to first time buyers and existing homeowners who are looking to move and require a 95% Loan-To-Value mortgage.

In the event of a repossession, the guarantee compensates mortgage lenders for a portion of net losses suffered. The guarantee applies down to 80% of the purchase value of the guaranteed property covering 95% of these net losses. The lender therefore retains a 5% risk in the portion of losses covered by the guarantee. This ensures that the lender retains some risk in every loan.

First Homes

Deposit required: Normally at least 5% of the discounted purchase price, depending on the property and on mortgage eligibility from participating mortgage lenders.

Ownership: Full Ownership

Benefits: Homes discounted by at least 30% compared to market prices, making deposits and mortgage repayments significantly cheaper.

Requirements: First-time buyer, earning less than £80,000 per year (£90,000 in London), or a lower figure if set by the council.
Mortgage to cover at least 50% of purchase price. Councils can apply additional eligibility criteria, such as restricting the scheme to key workers or people with a local connection.

Overview

First Homes is designed to help local first-time buyers and key workers onto the property ladder by offering homes at a discount of at least 30% compared to the market price. In some areas the discount could be as high as 50%.

The discounts will always apply to the homes, so generations of new buyers and the local community will continue to benefit each time the property is sold.

Eligibility

  • Purchasers of First Homes must be first-time buyers and must have a household income not exceeding £80,000 and £90,000 in London (or lower if set by the local authority)
  • Post-discount price caps on first sale of the property of £250,000 across England and £420,000 in London (or lower if set by the local authority)
  • A First Home should be the buyer’s only home and a purchaser will need to use a mortgage or home purchase plan for at least 50% of the purchase price of the home
  • Local connections and/or key worker status as determined by the relevant local authority

First Home properties should, in time, be available throughout England.
A programme is underway to deliver up to 1,500 First Homes in up to 100 locations across England, and this is due to conclude in September 2023.

What you can do

Start by determining whether the developer is offering the scheme in the development that you want to buy.
First Homes accepts qualified applicants with no application deadline whenever there are plots available. When you are ready to reserve a plot under the scheme, you will then apply to have your eligibility validated.

Shared Ownership

Deposit: The size of your deposit will be determined by your mortgage provider’s terms and conditions, but it will typically range from 5% to 25% of the value of your share.

Ownership: A leasehold interest worth between 10%-75% of the home’s value (local conditions may apply)

Benefits: Enables people to get on the housing ladder with a smaller mortgage and deposit.

Requirements: A gross annual household income of £80,000 or less when buying outside of London, and £90,000 or less when buying in London.

Overview

If you can’t afford all of the deposit and mortgage payments for a home that meets your needs, Shared Ownership offers you the chance to buy an initial share of a home worth between 10% and 75% of its market value. You will pay rent to the housing provider on the rest.

You can buy more shares in your home in the future, as and when you can afford to do so. This is known as ‘staircasing’. If you buy more shares, you’ll pay less rent. The amount of rent you pay will be based on the size of the share of the home you have not bought.

Eligibility

You could buy a home through Shared Ownership in England if:

  • Your household earns £80,000 a year or less when you’re buying outside of London, or £90,000 a year or less when you’re buying in London
  • You are a first-time buyer, you used to own a home but can’t afford to buy one now or are an existing shared owner looking to move.

Through housing organisations’ resale programs, you can purchase a newly developed home or an existing one with shared ownership. To cover your share of the home’s purchasing price, you’ll need to either obtain a mortgage or use your savings. All properties in shared ownership are leasehold.

Right to Buy

Benefit: Council tenants are offered a discount of up to £96,010 (£127,940 in London) to help buy the home they are renting.

Requirements: Must be a secure tenant and been a public sector tenant for at least 3 years.

Overview

The Right to Buy scheme helps eligible council and housing association tenants in England to buy their home with a discount of up to £127,940 (£96,010 outside London).

The government’s Right to Buy Agent service also offers free and impartial advice on Right to Buy.

Help to Build: Equity Loan

Ownership: Full ownership.

Benefit: A government equity loan to help fund your custom or self-build home.

Requirements: 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 and secure a self-build mortgage from a lender registered with Help to Build.

Overview

Help to Build is a government equity loan that is available to people in England who want to custom build or self-build their own home and is available to those with a small deposit.

A custom build or self-build home means that you can decide on the:

  • Design – building in features that suit your lifestyle, such as energy efficiency and smart technology
  • Internal layout – designing a home that will suit your family’s specific needs
  • Location – homes can often be the size and scale you want, built on smaller plots of land available for development in the area you want to live.

The equity loan amount can be between 5% to 20% (up to 40% in London) of the total estimated cost.

If you’re eligible, you can spend up to £600,000 on your new home. This must include the cost of the land if you don’t already own it, and no more than £400,000 on the cost to build it.

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
  • Secure a self-build mortgage from a lender registered with Help to Build

How long is the scheme open for?

Help to Build funding is available for 4 years. If demand is higher than expected, funding may become unavailable sooner.

How long will the process take?

If you accept the offer of an equity loan from Help to Build, you’ll have 3 years to buy the land (if needed) and build your home.

Right to Shared Ownership

Deposit required: The size of your deposit will be determined by your mortgage provider’s terms and conditions, but it will typically range from 5% to 25% of the value of your share.

Ownership: A leasehold interest worth between 10%-75% of your home’s market value.

Benefits: Enables people to get on the housing ladder with a smaller mortgage and deposit.

Requirements: You must meet all of the Right to Shared Ownership’s eligibility criteria. Your home must also be eligible. To find out if your home is eligible, please contact your landlord.

Overview

If you are a tenant of a home for Social Rent or Affordable Rent, the Right to Shared Ownership offers you the chance to buy an initial share in your current home worth between 10% and 75% of its market value on Shared Ownership terms. You will pay rent to your landlord on the rest.

You can buy more shares in your home in future, as and when you can afford to do so. This is known as ‘staircasing’. If you buy more shares, you’ll pay less rent. The amount of rent you pay will be based on the size of the share in your home you have not bought.

Eligibility

To be eligible for the Right to Shared Ownership, you must be the tenant of a housing association (or tenant of another Registered Provider of social housing that is not a local authority, co-operative housing association, or Community Land Trust).

The Right to Shared Ownership does not apply to homes in remote rural areas, or specialist homes for older people or people with disabilities.

Although they cannot be accessed through the Right to Shared Ownership, specialist homes for older people or people with disabilities are available on Shared Ownership terms through the Older Persons Shared Ownership (OPSO) and Home Ownership for People with Long-Term Disabilities (HOLD) schemes.

To be eligible for the Right to Shared Ownership, you must also:

  • Have lived in your current home for at least 12 months
  • Have been a tenant of social and/or affordable housing for at least three years (this need not be for three years consecutively or with the same landlord)
  • Satisfy all of the usual eligibility criteria for the Shared Ownership scheme, including its income threshold (a gross annual household income of £80,000 or less when buying outside of London, and £90,000 or less when buying in London).

A full list of eligibility criteria can be found on the Right to Shared Ownership application form.

Home Ownership for People with Long-Term Disabilities (HOLD)

Ownership: Between 10-75% of the home’s value

Overview

If you have a long-term disability and you are unable to buy a home in another Shared Ownership scheme that meets your needs, HOLD offers you the chance to buy a home on the open market on Shared Ownership terms.

HOLD operates on the same basis as Shared Ownership. As a result, you can buy an initial share of a home worth between 10% and 75% of its market value. You will pay rent to the housing provider on the rest.

You can buy more shares in your home in the future, as and when you can afford to do so. This is known as ‘staircasing’. If you buy more shares, you’ll pay less rent. The amount of rent you pay will be based on the landlord’s share.

Eligibility

You may be able to buy a home through HOLD if you have a long-term disability and meet the following criteria:

  • Your gross annual household income is £80,000 or less outside London, or £90,000 or less in London
  • You are a first-time buyer, you used to own a home but can’t afford to buy one now or are an existing shared owner looking to move
  • You have a long-term disability as classified under the Equality Act
  • You are 18 years old or older (or within 6 months of turning 18) there is no upper age limit
  • You have access to funds to cover legal costs and a deposit of between £15,000-£20,000
  • You want to live in an area where HOLD is provided

Right to Buy: Preserved Right to Buy

Benefits: Eligible tenants are offered a discount of up to £96,010 (£127,940 in London) to help buy the home they are renting.

Requirements: If you were a secure council tenant and were living in your home when it was transferred from your council to another landlord, then you may have a Preserved Right to Buy.

Overview

If you’re a housing association tenant in England the Preserved Right to Buy scheme could help you buy the home you currently live in with a discount of up to £96,010 (£127,940 in London).

Eligibility

You could be eligible if you were a secure council tenant and you were living in your home when it was transferred from the council to another landlord, like a housing association.

You could also be eligible if you then moved to another home owned by the new landlord. But not if you moved to a home owned by a different landlord.

Your landlord will be able to tell you whether you have the Preserved Right to Buy. If you’re a housing association tenant and you’re not eligible for this scheme, you may be eligible for the Right to Acquire scheme instead.

The government has plans to extend the Right to Buy to more housing association tenants.  The government will evaluate new pilot areas for the extension known as Voluntary Right to Buy. More details will be announced in due course.

Find out if you could be eligible for the Preserved Right to Buy, what discount you might get and whether you can afford to buy – and how to take the next steps if you decide to apply.

Lifetime ISA (LISA)

Deposit required: A minimum payment of £1 required to qualify the account as ‘open’

Benefits: The government will contribute 25% on up to £4000 saved in a LISA account every year – that is a Government top up of up to £1000 each year.

Requirements:  First time buyer aged 18-39 purchasing a first home up to the value of £450k.

Overview

The Lifetime ISA (LISA) is a long-term savings product intended to support younger people saving for their first home, or for later life. Up to £4,000 can be saved each year, attracting a government bonus of 25% on each new payment. Funds can be withdrawn without charge 12 months after opening the LISA, if used as a deposit for the account holder’s first home, subject to certain conditions.

Forces Help to Buy

Benefits: Interest free advance of pay repayable over 10 years.

Requirements: Regular service and completed 12 months service from date of enlistment and completion of Phase One Training.

Overview

The Forces Help to Buy scheme allows Regular Serving Personnel to borrow up to 50% of their annual salary to a maximum of £25,000, interest free. This advance may contribute towards a deposit for owning your own home, solicitor’s and estate agent’s fees, and in some extenuating cases to adapt a current property as your family’s needs change.

All regular service personnel are eligible who:

  • Have completed the pre-requisite length of service
  • Are not a reservist or member of the Military Provost Guard Service
  • Have more than 6 months left to serve at the time they apply
  • Meet the right medical categories.

There may be instances where exceptions to the standard rules may be justifiable, especially where you have extenuating medical and personal circumstances.

Service Personnel can apply for Force Help to Buy one the Joint Personnel Administration (JPA) portal, through the self-service application. Full instructions are on the JPA portal in the Self-Service User Guide: Applying for Pre-Approval for Forces Help to Buy document.

Other government-backed housing schemes can be used together with Forces Help to Buy.

Rent to Buy

Ownership: Either 100% or on Shared Ownership terms

Benefits: Tenants are offered an intermediate rent (up to 80% of the market rate), for a minimum of five years, to provide them with an opportunity to save for a deposit to buy their first home.

Requirements: First-time buyer

Overview

Rent to Buy is typically offered by housing associations. The scheme offers working households the chance to rent a home at Intermediate Rent providing them with the opportunity to save for a deposit over time to purchase the home. Rent to Buy will usually be offered on new build homes.

Tenants will pay an Intermediate Rent, which is rent that must not exceed 80% of the local market rate (including service charges). This discounted rent should be available to tenants for a minimum of five years.

At the end of the initial five-year period, the tenant will be offered the chance to purchase the home either outright or on Shared Ownership terms. Should the tenant require more time to save for a deposit, the housing association can also continue letting the home on existing terms but is not required to do so.

Eligibility

You can apply for Rent to Buy if you are a first-time buyer.

There may also be other local eligibility criteria attached to Rent to Buy schemes. As a result, it will be important to check with the housing association offering the scheme.

Other

Property Developer Incentives

In recent months, an increasing number of property developers have begun offering incentives such as ‘mortgage paid offer’ and ‘stamp duty contribution/paid’ deals. These can be attractive propositions for first-time buyers as having a mortgage paid for the first twelve months could remove a lot of financial pressure, particularly in the current climate.

If you are attracted to a new build property because of an incentive, read the terms and conditions. A mortgage paid offer incentive is likely to be limited to a percentage of the purchase price of the property, and incentives and offers are often available on selected plots only and can be withdrawn at any time without notice.

Source: Property Notify

ESTATE AGENTS ALDENHAM•ESTATE AGENTS BUSHEY•ESTATE AGENTS LETCHMORE HEATH•ESTATE AGENTS OXHEY HALL•ESTATE AGENTS OXHEY VILLAGE•ESTATE AGENTS RADLETT•ESTATE AGENTS WATFORD

ESTATE AGENTS HERTFORDSHIRE•ESTATE AGENTS HERTFORDSHIRE