To combat the decline in first-time buyers in the UK, there are several initiatives that can help people get on the property ladder.
1. Help to Buy
There are different types of Help to Buy home schemes that have been backed by the Government to get first-time buyers on the property ladder more quickly. With a Help to Buy Equity Loan, the Government lends you up to 20% of the cost of your newly built home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest. The equity loan is interest-free for the first five years. By signing up for the Help to Buy Individual Savings Account (ISA), you’ll get an extra 25% from the government on top of whatever you put in your savings. For example, for every £100 you put into the ISA, you’ll get £25 back. The ISA is available from a variety of building societies, banks and credit unions throughout the UK. You can start to claim once you’ve saved £1,600 and can claim up to £3,000 per person (meaning couples could claim up to £6,000). To be eligible, you need to be a UK resident and you must not own another property. You’ll need to be quick in opening a new account — the scheme ends on 30 November 2019. Though they won’t be available to new savers after this date, you can keep saving into your account if you opened your Help to Buy ISA before then.
2. Shared ownership
Shared Ownership allows you to buy a share of your home starting from as little as 25% and rising up to 75% of the property’s value. The amount you purchase is based on how much you can afford so you don’t overstretch your finances. You then pay subsidised rent to a landlord on the remaining share of your home. You only need to have saved a deposit on the share you are buying rather than on the full house price. Once you buy, you’ll pay mortgage repayments on the share that you own and rent on the share that you don’t. For example, if you bought a 50% share on a £150,000 home, you’d pay monthly mortgage repayments on £75,000 and rent on the other £75,000. And when you're ready to, you can buy more shares, which in most cases leads to outright homeownership.
Countering the ‘Generation Rent’ narrative
With several schemes available to help first-time buyers the future of home-ownership might not be so bleak. “Whatever stage of the journey they’re at, there are now several options available to help get first-time buyers on the property ladder,” says Zac Worthington, Senior Sales Manager at Laurus Homes. “Schemes like Help to Buy and Shared Ownership mean that buyers can take capitalise on the current standstill in house prices without needing the big deposits that are taking people decades to save for. “It’s an opportunity to subvert the ‘Generation Rent’ narrative that, hopefully, more people will take advantage of.
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