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Which first-time home buyer scheme is right for me?

lease, rental and selling home. Real estate agent manager smile holding key for new owner.  rent house, Sales, loan credit financial, insurance, Seller, dealer, installment,  buy, sell, move in
It's never been harder for a first-time buyer looking for a home. Photo: Getty (Nuttawan Jayawan via Getty Images)

With the average UK property price sitting at £284,691 in December 2023, mortgage rates increasing from their historic lows and rents up by over 6% annually across the country, it’s never been harder to be a first-time buyer.

That said, there are several private and government-backed schemes that have been introduced to help you get on the ladder. Whether it’s helping you to build up a deposit, allowing you to buy a share of a home, one at a discount, or giving you access to high loan to value mortgages, before you give up on your home-owning dreams, take a look at what’s on offer.

From shared ownership to rent to buy, here are the key merits, differences and issues of nine of the main schemes, aimed at helping people purchase their first home.

Shared ownership

This scheme allows first-time buyers to buy a share in a new build property and then pay rent on the reminder, meaning you can get a foot on the property ladder with a smaller deposit and mortgage.


“Household income is capped when buying with shared ownership, meaning the scheme is available to households earning up to £80,000 outside of London, or £90,000 in London,” says Kevin Sims of SO Resi. “This ensures that the properties can only be purchased by the people that can’t otherwise afford to buy.”

Anyone using the scheme can ‘staircase’, buying more shares in a property (and therefore paying less rent), as and when they can afford it. “SO Resi pioneered a 1% staircasing initiative which has now been rolled out nationally by the government, which allows you to purchase an extra 1% share each year with no associated legal costs or fees," says Sims.

Read more: Is there an ethical way to invest in property?

One thing to be aware of with shared ownership is that while you only own, for example 25% of the property, you’re still liable for 100% of the service charge and any extra maintenance costs. Shared ownership properties can also be more complicated to sell on as prospective buyers need to also meet the housing association’s income criteria. That said, if house prices go up, you’ll build up equity and it’s a stabler option than renting.

Help to Buy: Mortgage Guarantee Scheme

Not to be confused by the Help to Buy: Equity Loan scheme, which ended in March 2023, the Help to Buy: Mortgage Guarantee Scheme allows employed first-time buyers or existing homeowners to purchase a property up to the value of £600,000 with just a 5% deposit. As this is a high loan-to-value ratio, the government takes on some of the risk, making these mortgages more palatable to participating lenders.

“It also opens up more options generally for first-time buyers, as even if you have a larger deposit, you can still access these products and keep some savings back if you see a property that may need refurbishment on completion,” says Jonathan Kelly of Clifton Private Finance.

House resting on calculator concept for mortgage calculator, home finances or saving for a house
Help to Buy: Mortgage Guarantee Scheme allows employed first-time buyers or existing homeowners to purchase a property up to the value of £600,000 with just a 5% deposit. Photo: Getty (boonchai wedmakawand via Getty Images)

That said, he flags: “You will still pay slightly higher rates than a lower loan to value mortgage, and limitations may apply”. These limitations include committing to a five or ten-year fixed deal as there are no two-year or tracker options available.

Borrowers also need to be aware of the risk of negative equity and try to repay some of the capital loan as well as the interest.

Save to Buy

Fairview’s Save to Buy scheme sees first-time buyers living at a new build property rent-free while they pay fixed, monthly instalments, 100% of which go towards building up their deposit.

Buyers only need a 1% deposit before they move in, and it normally takes between six months and a year for them to save up the rest of their deposit and complete on their purchase. To be eligible for the scheme, you need to have been in full time employment for three months and have the 1% in savings before you move in.

“Save to Buy is designed for all first-time buyers but it’s particularly useful for those who are stuck in a vicious rental cycle, unable to save for a deposit because of their rental costs,” says Fairview’s Chris Hood.

“Each Save to Buy agreement is tailored to the specific buyer, with the fixed monthly payments calculated based on their personal finances and the average local market rent.” While the scheme is expanding, it’s currently only offered on a first-come, first-served basis at the Dock28 and The Green at Epping Gate developments.

Deposit unlock

Deposit unlock allows you to buy a new build home from a housing developer with just a 5% deposit. As this means a high loan-to-value mortgage, and new build properties can initially lose value, housebuilders use some of the money from the sale of the property towards insuring the mortgages, making lenders more comfortable with this type of borrowing.

“Due to the high loan-to-value that comes with deposit unlock, some of our buyers have found the eligibility and credit rating checks from mortgage providers to be particularly scrutinous when receiving applications through the scheme,” says Hood. “Our brand partner Experian recommends you start looking after your credit score as soon as you can, even if you’re not yet ready to buy.”

First Homes

First Homes is a government-backed scheme which enables first-time buyers to purchase a new build property at 30-50% off its market value, up to a maximum of £250,000 (or £420,000 in London).

You need to meet minimum and maximum income criteria, and, in certain areas, the scheme is only available to key workers. When you sell on the property, you must sell it with the same level of discount to someone who is eligible for the scheme. Unlike shared ownership, you own the property in its entirety but there are restrictions when it comes to renting it out.

Read more: The pros and cons of a 99% mortgage

“Any first-time buyers interested in a new build in their local area should get in touch with the developer to see availability,” says Kelly. “Priority is given to certain occupations i.e. serving members and veterans of the armed forces, and key workers including nurses, police, firefighters and teachers.”

Rent to Buy

Rent to Buy enables local people to save for a deposit by renting out properties at around 20% below their market rent. The initial tenancy lasts for two years, after which you can either extend the tenancy or, if you have saved up enough of a deposit, apply for a mortgage and buy the property. Rent to Buy is available in England, although London is covered by a different scheme, London Living Rent.

London Living Rent

As its name suggests, the London Living Rent (LLR) scheme is only available in the capital and allows renters without a deposit the chance to get on the housing ladder.

The idea is that Londoners rent properties for a below-market amount and then build up a deposit so they can then buy a share in the property. To be eligible for a LLR flat, you need to live in the local area, meet certain income criteria and be unable to buy a property (including with shared ownership) on your own.

The red brick Victorian row houses of Muswell Hill with panoramic views across to the skyscrapers and financial district of the city of London.
London Living Rent scheme enables renters without a deposit the chance to get on the housing ladder. Photo: Getty (coldsnowstorm via Getty Images)

“LLR is an excellent option for middle-income Londoners who want to save towards buying a home,” says Andrea Palmer, head of LLR at L&Q. “LLR rents are based on one-third of average local household incomes, as defined by the Greater London Authority – which provides a genuinely affordable stepping-stone onto the property ladder for Londoners.”

Even if you don’t manage to buy the property, the scheme gives you some stability when renting. “All properties on the LLR scheme guarantee tenants an assured tenancy of a minimum of three years and a maximum of 10.”

Lifetime ISA

Lifetime ISAs (LISAs) can be used to save up for your first home (as well as a pension). You can put in up to £4,000 annually, until you’re 50, as long as you make your first payment before you’re 40. The government will then add a 25% bonus to your savings, up to a maximum of £1,000 a year. You are able to withdraw money to buy a house up to the value of £450,000, 12 months after opening your account.

“If you pay in your full allowance each year between the ages of 18 and 49, you can gain a total bonus of up to £32,000,” says Kelly and you can see your savings build up straight away. “With a LISA you receive the government bonus the following month – this means you can invest that bonus, and help it grow more for your deposit.”

Read more: The on-trend features luxury property buyers are looking for this year

Savers need to be aware that anything you put into your LISA is included in your annual £20,000 ISA allowance and that, while you can withdraw the money for other purposes, you’ll be worse off.

“You can withdraw outside of these reasons (i.e., not for your first home or your retirement), but you will be charged 25% of your withdrawal amount. On face value, that may seem fair considering you get a 25% bonus from HMRC on your contributions – but it will actually cost you more,” explains Kelly.

“Say you contribute £4,000, and get a 25% bonus of £1,000, taking your total amount invested to £5,000. If you then withdraw that £5,000 outside of the LISA rules, you’ll be charged 25% of £5,000 – not £4,000 – which comes to £1,250, meaning you only get back £3,750 from the £4,000 you put in.”

Right to Buy

This scheme allows council house tenants to buy their property at a discount. You need to be a secure tenant and had a public sector landlord, such as a housing association or council, for three years to be eligible. The property also needs to be self-contained and your only home.

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