Everything You Need to Know About the ‘Help to Buy’ Scheme Extension

Coronavirus delayed everyone’s plans. For those looking to make use of the Help to Buy equity loan scheme in England, it has been tough. The UK Government extended the scheme twice already, but the backlog and demand are still large. Here is everything you need to know about the Help to Buy scheme extension, as well as other similar support programmes from the UK Government.

What is the Help to Buy equity loan scheme?

It’s an attractive programme that allows buyers to get support from the government on their home purchase. Nearly 300k homes have used the scheme so far, and according to the BBC, “the scheme, in its current form, is coming to an end in England. However, data from Homes England obtained through a BBC Freedom of Information request showed that, as of the end of January, there were 16,691 sales still to be completed under the current scheme.” The guide for the scheme that is ending can be found here. It allows qualified applicants to get 40% of a London home and 20% of an outer England home funded by a loan from the UK Government. However, the APR is quite high, typically at 5.2%. Your mortgage and deposit must be at least 60% of the property price, you must furnish a 5% cash deposit, and the home’s value can’t be higher than £600k. It now finishes at the end of May 2021, but only if you already had a reservation in place with Homes England. The Help to Buy scheme that will replace the current iteration is only open to first-time buyers and has more restrictions in place.

Why was it extended?

The short answer? Covid. The pandemic caused crushing halts to the construction sector as workers tested positive and had to stay home. Supply chains were disrupted, and lending institutions operated on a skeleton crew. According to Gov.uk, “under the current scheme, new homes would need to have been finished being built by the end of December – the extension will mean the deadline will now move to 28 February 2021, helping thousands of customers to get the keys to their new home. The deadline for the legal completion of the sale will remain the same – 31 March 2021. The government is also announcing an extra measure to protect existing customers who have experienced severe delays as a result of coronavirus. Homes England, the government’s housing accelerator, will work with those who had a reservation in place before 30 June to assess their situation and look to provide an extension where necessary. In which case, they will have until 31 May 2021 to legally complete.”

This doesn’t apply to Scotland, Northern Ireland, or Wales, who have their own programmes that aren’t run by the UK Government.

What other government programmes exist?

Well, the new version of the Help to Buy equity loan comes into effect on 1st April, 2021. It’s only open to first-time buyers though, and has lower limits on minimum property values. Other than that, it’s nearly identical to the current scheme. Documentation is available here. Some more general homebuyer programmes are:

• Shared Ownership - This lets you part-rent and part-buy a home. We wrote a guide on this programme here.
• Homes for Londoners - A programme of shared ownership just for London residents who can’t find anything on the open market and need support. It features mostly new builds.
• 95% Mortgage Guarantee Scheme - Similar to the Help to Buy mortgage guarantee (which ended in 2016), this provides some government backing for buyers with a 5% deposit. According to Which?, “under the terms of the scheme, the government will guarantee the portion of the mortgage over 80% (so, with a 95% mortgage, the remaining 15%). This might sound complicated, but in practice, it just means the government will partially compensate the lender if a homeowner defaults on (fails to pay) their mortgage.”
• Shared Ownership Resale - Buy a share of a home that was previously purchased by a Shared Ownership participant. Shares range up to 75%. Priority is given to armed forces members.

Niche programmes for buying or renovating

If you meet specific conditions, you may benefit from these smaller-scale programmes:

• Forces Help to Buy - Armed services personnel can use this scheme to unlock up to 50% of their salary to renovate or buy a home.
• Self-Build Portal - Resources and support for those looking to self-build or custom build their own home.
• Discounted Sales - Some boroughs and councils will offer properties at a reduced rate to those with a local connection. It’s worth contacting the boroughs where you grew up, work, or currently live to see if there are any offers available.
• Older People’s Shared Ownership - Lets those 55 years and older buy only 75% of a shared ownership property but then not have to pay rent on the rest.
• Home Ownership for People with Long-Term Disabilities (HOLD) - This programme can help you get a home if the usual shared ownership properties don’t work for your disability need.
• Right to Buy/Right to Acquire - This allows you to purchase your council house after 3 years of occupation. You get a discount on the property, but the landlord has to agree, and there are other conditions.

Schemes in NI, Wales & Scotland

The devolved governments have a vested interest in providing programmes for their constituents. Most of the Help to Buy lookalike schemes have ended in these countries, however. For the most up-to-date home programmes on offer visit their local government websites. The schemes for Scotland are available here, the schemes for Wales are available here, and the schemes for Northern Ireland are detailed here. Northern Ireland in particular has an interesting concept of co-ownership, which is similar to shared ownership, but not exactly the same.

As with any home purchase, either on your own or through a scheme, you’re going to need an expert conveyancer. Find and compare quotes from loads of local conveyancers for free using our tool today.

What is the Conveyancing Process?

Stages of the conveyancing procedure, whether you are a buyer or a seller, or both, can include many stages and can feel quite overwhelming when you are in the depths of the process, but overall, it is a relatively simple journey and if you know what to expect it will appear to pass far more quickly - so in this article we have set out a roadmap for both buyers and sellers.

Firstly though, for buyers,before you even make an offer on a house that you have seen, get your mortgage approved in principle and select a conveyancing solicitor - your lending institution will have strict rules in place when it comes to conveyancers they choose to work with and selecting a solicitor not in their panel, may cause unnecessary issues and delays. So, it is advisable to get your ducks in a row when the home of your dreams comes on the market.

The Buyers Process

Instructing a conveyancing solicitor:

Once you have decided on your conveyancing solicitor, they will send some initial paperwork to you to complete. This will usually be their terms of business, a personal information questionnaire, information regarding your proof of funds and your stamp duty obligations.

Conveyancing Searches:

These will include but are not limited to, local authority searches, a water and drainage search, an environmental search, and possibly a coal mining search should this be required. These searches come with associated fees and your conveyancing solicitor will usually charge you for these early in the process - there is usually no way to minimise these costs.

Surveys:

There are three main types of surveys: homebuyer's report, full structural survey and snagging survey each of which is vital to the process and the purchase can not go ahead without them.

Negotiate a completion date:

Your conveyancing solicitor will update you on the results of the searches. If all is good, the next step is to come to an agreement on a completion date with the seller. The completion date is the date the keys get handed over and should be acceptable to both you and the seller. Be flexible here, many sellers will want to time it for the start or end of a month to tie in with their mortgage payments.

Deposit money should be paid to your solicitor:

You are almost ready to exchange contracts, which means you need to get your deposit to your solicitor. Your solicitor will also get you to sign the contract at this point – this is the point where you commit to buying the seller's house.

Exchange contracts:

When your conveyancing solicitor and the solicitor acting for the seller swap signed copies of the contract this is known as the exchange of contracts. There is now a legally binding contract between you and the seller. Once this has happened, you cannot pull out from the sale. If you do, you will forfeit your deposit money. But, on the plus side, the seller can't back out either.

Completion

This is the day you can collect your keys to your new home. Money will be sent from the buyers’ lawyers to the vendors’ lawyers. Once they receive the funds, they will release the keys to you and they can be collected from your estate agent! Congratulations!

Get a completion statement:

Your solicitor will give you a completion statement with a clear breakdown of the money you need to give the solicitor. This will include any outstanding deposit, stamp duty land tax, solicitors' fees etc. You will usually have to pay these on or before your completion date.

The Sellers Process

Sale Agreement:

When you instruct a conveyancing solicitor for your sale, they will request your title deeds as well as ask you to complete a set of questions.

You will certainly need to provide:

• All property information
• Fixtures and fittings.
• If the property is under leasehold, all details will be required.

Make certain to talk about a completion date with your conveyancer to be negotiated with the customer's solicitor. Your home loan lender will certainly request your conveyancing solicitor provide a statement for the overall sum that requires to be settled on conclusion of your sale.

Exchange

As soon as the contracts are traded, your solicitor will obtain the buyer's deposit-- this is normally 10% of the building price. At this point your buyer is unable to back out and you will remain in a legally binding contract to offer the property to them -- you can no longer approve or accept another alternative offer on the property.

Completion

Your conveyancing lawyer will need settlement for provision of their services upon completion on your property sale and they will then oversee the finalising of all accounts. A final settlement will certainly be drafted for your approval and then your conveyancing solicitor can confirm that all actions and monies have arrived at their destinations and the sale is final. They will also liaise with the purchases conveyancer to concur the same.

This concludes the process for both the buyers and the sellers, all that is left to do now is for the relevant solicitors to report to statutory authorities such as the Land Registry and HMRC.

Having a professional and experienced conveyancing solicitor on your team to take prompt action wherever and whenever necessary is key to the success of any property transaction and we have a wide database of just such parties - At Compare Conveyancing Quotes, we allow anyone who needs the assistance of a conveyancing professional to compare quotes instantly, get your conveyancing quote here. Last year we helped over 33,000 people find a conveyancer to help them on their property journey.

What your conveyancing solicitor will do, stage by stage...

Planning on buying a new home this year? Then you will need to know about conveyancing. This is the legal side of a property purchase, you don’t need to carry this out yourself but you will need to instruct a solicitor to take care of it for you.

Here are the conveyancing and procedures your conveyancing solicitor will carry out when assisting you to buy a property:

Initial stages:

As soon as you have advised a conveyancing solicitor that you wish to instruct them to go ahead with their services in relation to your property purchase you will need to deposit funds to allow them to carry out all relevant searches required as part of the conveyancing process.

At this stage if you are buying the building jointly, you must likewise let your solicitor recognise exactly how you desire to hold the residential property, it is common placeto purchase a house in joint names so there are important decisions to be made in connection with joint possession. There are two ways in which you can jointly have a property;

• Joint Tenantsis where both parties have an equivalent rate of interest in the home and if one of the parties passes away, the survivor immediately possesses the property.
• Tenants in Commonis where you each hold a detailed share of the building as well as having the ability to leave that share to somebody else in your Will in the event of your death.

You will need to advise the Estate Agent which solicitor you intend to use to make sure that they can send out a "Memorandum of Sale" as well as "Residential or commercial property Particulars" to all parties.

Your solicitor will then contact the seller's lawyer to validate that they are instructed and to request the draft agreement. This must also be accompanied by a pack that consists of all information relevant to the property and any surveys and a questionnaire completed by the sellers. If the property is leasehold a duplicate of the Lease will certainly additionally be included.

You will most certainly need to inform your solicitor if you have a related sale and instruct them in connection with that if needed.

Pre-Contract Stage

Once the draft contract pack has been received, your conveyancing solicitor will examine the contract, the title deeds and the forms completed by the seller, and if necessary, raise any enquiries with their solicitor.

Your conveyancing solicitor will additionally after that carry out all relevant searches which can take 2/3 weeks to get, as you will be relying on the Local Authority with their existing workload.

If the building you are buying is leasehold, your conveyancing solicitor will require to send out a standard Managing Agents Questionnaire to the seller's solicitors which will subsequently be sent to the relevant Landlord/Managing Agents/Residents Organisation for completion as well as return.

If you are taking out a home loan or mortgage, your conveyancing solicitor will get a copy of the deal as well as verify the conditions and will normally take on legal services required by your lender as well.

Once all searches are complete and enquiries answered, your conveyancing solicitor will ask you to sign the contract papers including your mortgage deed.

Exchange of contracts

Before exchange of contracts your lender will require you to have your buildings insurance in place.

All parties involved need to agree on a completion date.

Once contracts are exchanged between the respective solicitors (usually over the telephone) you are legally bound to buy, and the seller bound to sell the property. Should either party pull out, the other will be entitled to claim compensation for breach of contract.

At the point contracts are exchanged, your solicitor will send your deposit monies to the seller’s solicitor. This acts as security for the seller in the event that you change your mind or for some reason are unable to pay the balance on completion. If this does happen the seller will be entitled to keep your deposit monies and may take you to court if the deposit is not enough compensation for breaching the contract. In the same way, if the seller’ breaches the contract and refuses to complete for whatever reason, you could apply to the court for an order to force the seller to complete or else get your deposit back and sue the seller for compensation. It is therefore very rare that a sale does not complete once contracts have been exchanged.

Between Exchange and Completion

Your solicitor will draw up the Transfer Deed so that the property can be registered in your name after completion. Your solicitor will also carry out some final searches on behalf of your lender at the Land Registry.

During this period you should, if you have not done so already, receive a final statement from your solicitor showing all expenses and giving you a final figure which you will need to make sure is cleared in their bank account before the day of completion. If you are buying with the assistance of a mortgage, your solicitor will order the mortgage monies in time for completion however in most cases a minimum of 5 working days’ notice is required for this by most lenders.

Completion (or Moving Day!)

Completion takes place when the seller’ solicitor confirms that they have received the balance of the money that is due. Once this has happened the keys ought to be released to you either directly by the seller themselves or via the Estate Agents.

Post Completion

Your lawyer will after that pay any kind of Stamp Duty Land Tax due, and also upon payment of the title deeds and also papers as well as Transfer authorised by the seller', register your ownership with the Land Registry.

Once the registration has been received back from the Land Registry, if you purchased with the assistance of a mortgage, your solicitor will send a copy of the registered title to your lending institution as evidence that their charge has been registered, which will continue to be until such time as you settle the loan in full.

To ensure you are getting a conveyancing solicitor who is offering you the most competitive rate and who will be acceptable to your lender, get a quote here.