Help to Build Scheme
The Government has been running ‘Help to Buy’ and ‘Right to Buy’ schemes for a number of years now, which see the Government help by providing a second charge for homeowners or allowing them to buy properties they have been renting from local authorities. These schemes are said to have helped some 765,000 people buy their own homes.
Following the success of such schemes, the Government has now announced ‘Help to Build’ which looks to remove barriers to homeownership by giving people the chance to build their own home and get on to the property ladder in a more affordable way.
The scheme is designed to take into account specific needs of people to build homes that are custom designed to the individual families and the local community. The scheme is hoping to help those with disabilities or with large families by creating homes tailored to certain requirements and making a better standard of living more accessible for all.
The Help to Build system hopes to create jobs and boost the economy, whilst delivering 30,000 – 40,000 new homes per year. It is also hoped that by allowing people to design and build their own homes, this will lead to a more diverse housing market with much more choice for potential home owners.
The Help to Build scheme allows applicants to borrow between 5% and 20% of the costs (and up to 40% in London), bridging the gap between deposit and the cost of land and materials. The total build costs cannot exceed £600,000, or £400,000 if the land is already owned. Applicants must use the property as their primary residence. Much like the Help to Buy scheme, borrowers will repay the costs on an interest-only basis initially (during the build), but this then changes to a standard repayment mortgage once the build is completed and will be in place for the rest of the loan. The loan must be repaid upon sale of the property or when the mortgage term is finished.
Help to Build will now look for a range of mortgage lenders who are keen to get involved and offer mortgages to prospective homeowners under this innovative scheme.
If you have any queries, please do not hesitate to contact our Property Team.