15 December 2021
Buying your first home? (Part 2)
The process of purchasing your first home can be quite daunting, which is why it’s important to know about several first-time buyer schemes which are currently on offer. They could provide the support and help you need to make purchasing your first home possible.
Over the years, the government has introduced several schemes to help first-time buyers. Each scheme has its own criteria in which a first-time buyer must meet to be eligible.
B P Collins can assist you with the purchase of your first home and guide you through the process, whether you’re seeking the assistance of one of the following schemes or not.
The first of this two-part series has explored the Help to Buy: Equity Loan, the Lifetime ISA, and the Help to Buy ISA. In this second part, we delve into the Shared Ownership Scheme and the First Home Scheme.
Shared Ownership Scheme
The shared ownership scheme allows you to buy a share of the property and pay rent on the rest. The share you can buy is usually between 25% and 75% and on some homes, you can buy a 10% share. However, if you reside in Wales, Scotland, or Northern Ireland, they have different rules.
You can buy a home through shared ownership if both of the following apply:
- your household earns £80,000 a year or less (£90,000 a year or less in London)
- you cannot afford all the deposit and mortgage payments for a home that meets your needs
One of the following must also be true:
- you’re a first-time buyer
- you used to own a home, but cannot afford to buy one now
- you own a home and want to move but cannot afford a new home suitable for your needs
- you’re forming a new household - for example, after a relationship breakdown
- you’re an existing shared owner and want to move
The shared ownership scheme was introduced in the form that we know it today in the 1980s via the Housing Act 1980, which incorporated the right to staircase (incrementally increase ones share in a property). The scheme helped people who were in housing need and could not afford to buy a home outright.
The First Homes scheme operates more directly on the property itself, establishing specific criteria the property must meet for it to be classed as a First Home. First Homes are a particular property that is sold at a discounted market rate (minimum 30% against the market value) and are sold to a person or persons meeting the First Homes eligibility criteria (see below).
After the discount has been applied, the first sale must be at a price no higher than £250,000 (or £420,000 in Greater London).
Who is eligible to purchase a First Home:
- A purchaser (or, if a joint purchase, all the purchasers) of a First Home should be a first-time buyer as defined in paragraph 6 of schedule 6ZA of the Finance Act 2003 for the purposes of Stamp Duty Relief for first-time buyers.
- Purchasers of First Homes, whether individuals, couples or group purchasers, should have a combined annual household income not exceeding £80,000 (or £90,000 in Greater London) in the tax year immediately preceding the year of purchase.
- A purchaser of a First Home should have a mortgage or home purchase plan (if required to comply with Islamic law) to fund a minimum of 50% of the discounted purchase price.
As experienced property lawyers who have a comprehensive understanding of how to deal with a variety of transactions to reach a successful outcome, B P Collins can assist you with your purchase.
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