Jane’s guest blogger this week is Jonathan Wall, Associate Solicitor and head of New Build at Jacksons Law Firm.
It seems that whenever we turn on the news, or read a newspaper article these days that the world economy is in a downward spiral, that young people have it worse than ever or that Brexit is going to ruin the lives of a generation. Whilst I cannot comment on such matters, it is a fact that young people in Britain are finding it harder than ever to get on the property ladder and are doing so at an every increasing age.
In response to the above, the UK Government has introduced a number of schemes and incentives to help people enter the property ladder. It begs the question therefore, why are people in the UK finding it ever difficult to get onto the ladder with these schemes in place. Below, I will take a brief look at the various schemes available.
Help to Buy ISA(“H2B ISA”)
A H2B ISA is available to first time buyers. The Government will give a 25% bonus, on the amount saved in an ISA, on completion of a property purchase. The bonus is available up to a maximum of £3000 per first time buyer and an applicant must have a minimum of £1600 in their ISA to receive a bonus payment. Solicitors apply for the bonus and charge a fee of £50 plus VAT per ISA in doing so. The ISA can only be used to purchase a property with a maximum purchase price of £250000, or £400000 in London.
The majority of high street banks offer this type of ISA and a H2B ISA can be opened with a maximum opening balance of £1000 – with a maximum monthly payment of £200 per month allowed thereafter. There is no maximum which can be saved in a H2B ISA, but the bonus will only apply up to the maximum threshold above mentioned.
Developer Incentives
Whilst not a Government scheme, most UK national builders will offer incentives if you purchase a new build property from them. These incentives vary from fittings and contents, to internal upgrades to financial incentives.
These incentives are commonly accepted by the majority of banks and building society’s on new build properties, whereas this isn’t the case on non new build properties.
Incentives offered will vary on a developer by developer basis and depend upon the property type, location and purchase price.
First Time Buyer Stamp Duty Relief
In the 2017 Autumn budget the Government increased the Stamp Duty threshold for first time buyers to £300000. This means that first time buyers purchasing a property up to £300,000 will pay no stamp duty land tax. The Government also decreased the tax payable between £300,000-500,000 for first time buyers. For those purchasing together, all buyers must be first time buyers to qualify for the relief and have never owned a property, or an interest in a property anywhere in the world.
This move shows further commitment from the Government to assist people entering the property ladder.
Help 2 Buy Equity Loan (“H2B Loan”)
The H2B Loan has been available now for around five years and offers assistance to qualifying applicants who must not own an interest in any other property anywhere in the world.
The H2B Loan is only available for the purchase of a new build property and is treated as a second mortgage. The H2B Loan is interest free for the first five years and is available up to 20% of the purchase price of a new build property. The maximum purchase price payable to use the scheme is £600,000. The loan is provided by the Homes and Communities Agency and administered by various regional H2B agents.
This scheme allows the purchaser to get onto the property ladder with only a 5% deposit and has been taken up widely across the UK.
In summary, it is clear to me that the Government is doing all it can to assist people in getting a foot on the property ladder. Never in recent times have so many schemes been available for people to take advantage of to enable them to own a property.
At Jacksons Law Firm we have a team of specialist property experts to assist with all your property needs. Please contact the team by calling 01642 356509/0191 2322574.
