Help to Buy could see greater take-up from first-time buyers


The Help to Buy scheme aims to assist buyers of new-build properties who would struggle to save up a deposit. In the current climate, this could be particularly beneficial to first-time buyers right now.

A new Zoopla report shows that some potential first-time buyers may be stepping back from the market. This is due to a number of factors, including financial instability linked to job uncertainty and COVID-19. Mortgage lenders are also more hesitant to offer high loan to value products, which rules out many first-timers.

Those who are unable to save for a larger deposit do have options, though. The government’s Help to Buy scheme has proved hugely popular since its launch, and means buyers need only a 5% cash deposit. A lender provides a 75% loan to value (LTV) mortgage, while the government offers a 20% loan for the shortfall.

The initiative is only available on qualifying new-build properties. As the number of new houses being built in the UK has continued to climb across the UK, the scheme has helped many to purchase these homes.

What’s changing in Help to Buy?

At present, Help to Buy is available to home-movers as well as first-time buyers. While it has come under some criticism for this fact, things are changing next spring. From April, the scheme will only be open to first-time buyers. Until then, this could mean a greater take-up from existing homeowners, who can take advantage of both the stamp duty holiday and Help to Buy.

The new scheme starting from 1 April 2021 will run for two years. As with the existing scheme, the buyer doesn’t pay interest on the loan for the first five years. After that, fees start at 1.75%.

There will be new price caps that apply to the new Help to Buy depending on region. These are:

  • North-east: £186,100
  • North-west: £224,400
  • Yorkshire and The Humber: £228,100
  • East Midlands: £261,900
  • West Midlands: £255,600
  • East of England: £407,400
  • London: £600,000
  • South-east: £437,600
  • South-west: £349,000

The government is also allowing extra leeway due to the ongoing coronavirus situation. Some homebuyers will be allowed more time to buy their home if they reserved it before 30 June 2020. This only applies if they have experienced severe delays because of COVID-19.

The scheme also runs differently in London. Because of the capital’s high house prices, the government loan portion increases to up to 40% on London properties.

Why are first-time buyer numbers falling?

Zoopla’s latest house price report shows a widening gap between first-time buyers and home movers. It points out that while those stepping onto the housing ladder have driven sales over the past 10 years, this has fallen slightly in recent months.

The report says: “FTB demand spiked immediately after the lockdown ended but has lost momentum as a result of growing economic uncertainty and reduced availability of higher loan to value mortgages.”

“Demand from FTBs remains well above 2019 levels but has fallen back in line with pre-COVID levels. We expect it to decline slowly over the rest of 2020.”

First-time buyers often rely on 90% loan to value mortgages to make their first purchase. According to the data, around 20% of all mortgages in 2019 were taken out on this basis. The current caution most mortgage lenders are exercising at present means many people won’t have access to high LTV mortgages.

It also points out that while this gap between first-timers and home-movers applies across the UK, house price variations between regions play a part. In London, where it was already difficult to save a deposit, only well-off first-timers are likely to buy there right now. In all likelihood, new homeowners will be even more attracted to cheaper areas of the UK like the north and Midlands, where their deposits will stretch further.

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800


Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator


Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.


Not a member? Sign up for free

Help to Buy could see greater take-up from first-time buyers


By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.