Help to Buy a family home: government scheme can be used to step up the ladder but buyers must act fast to take advantage

1/8
Anna White13 March 2019

The Help to Buy initiative, where London buyers can put down a five per cent deposit on a new home, take a 40 per cent state loan free of fees for five years and find the remainder through a mortgage, was designed with first-time buyers in mind.

It stoked activity at the bottom of the property ladder and kept developers building flats. However, while first-time buyers have accounted for 80 per cent of Help to Buy purchases since its 2013 inception, the scheme has also proved popular with others.

So-called “second steppers” — usually people trading up from a flat to a house, or downsizers releasing the value in their home after the children have flown the nest — have been tapping into Help to Buy in ever greater numbers, with 9,226 transactions reported last year.

Interest in the scheme from people who already own a home is greater outside London, largely because family houses in the capital tend to break through the £600,000 price limit on homes that qualify for Help to Buy. However, London has still seen a big jump in applications.

Buying a home for the second time

But did the Government miss a trick by not setting up a second, slightly higher, tier for second timers wanting a family home?

Mortgage broker Andrew Montlake agrees: “In the capital most of the construction has been concentrated around flats rather than addressing the family home shortage.

“There is an argument to say that the Government should have had two specific schemes, one for first-time buyers and one for those second steppers looking specifically for houses. This would encourage builders in this direction,” he says.

Savills' head of research, Lucian Cook, explains: “Help to Buy was designed to help more people achieve the home ownership dream. The Government did not want to be seen to be helping people profitably move up the ladder.

“However, we now have a lot of second steppers ready to make the next move into a family home but in the current market they have not accumulated enough equity to step up the ladder without help.”

How homeowners use Help to Buy

In London, an existing homeowner can only apply for a Help to Buy mortgage on their next home as long as it is under £600,000 and if they are in the process of selling. The scheme can only be used on their primary residence.

“You can reserve your Help to Buy purchase at any point but would need to exchange contracts on your old home before exchanging on your next one,” explains Holly Stock of property company JLL.

Also, time is running out if you want to go for Help to Buy, so non-first time buyers need to get a move on. The programme will end for them in 2021 but continue for first-time buyers for two more years.

“People will now realise that Help to Buy is only going to be available to them for a finite period of time and we could see an increase in take-up among the second steppers,” says Savills’ Lucian Cook.

Regardless of which rung of the ladder you are on, Help to Buy applicants should always proceed with caution, explains JLL’s Nick Whitten.

“You can’t rely on your home making enough money to cover your interest-free loan when you have to start paying back after five years.”

Family homes under £600,000

Bexley, Sutton and Barking and Dagenham are the three boroughs most likely to offer family homes under £600,000 across Greater London, according to Hamptons International.

Four-bedroom townhouses are available at Barking Riverside, the 11,000-home regeneration scheme on 443 acres of former industrial land and wetlands in east London.

Properties in the Parklands phase of the development, built by L&Q, are almost 70 per cent larger than the Mayor of London’s minimum space standard for a four-bedroom home.

Prices start from £570,000 with Help to Buy available. Each townhouse has a garden. Visit barkingriverside.london to register, or call 020 8617 1747.

Three-bedroom houses are on the market more centrally at Trinity Walk in Woolwich, which will also be served by Crossrail later this year. The three-storey properties have a parking space and a terrace.

From £595,000: three-storey townhouses in Woolwich with a parking space and terraces

Prices start from £590,000 for a three-bedroom townhouse and London Help to Buy is available.

Enfield in north London is in the capital’s top 10 cheapest boroughs for new-build homes, with stock to suit small families and downsizers.

A Grade II-listed mansion, Trent Park, was redesigned into a socialite retreat by Sir Philip Sassoon at the turn of the last century before being recommissioned by the War Office as an intelligence base.

Now 250 new homes have been built there by Berkeley, set in 56 acres of grounds, and will include one-bedroom apartments costing £575,000, designed with downsizers in mind.

It’s a short walk to Cockfosters high street with its coffee shops, continental delicatessens, florists and restaurants, and to Oakwood Tube station.

“Elderly downsizers will find Enfield particularly attractive because of the good transport links to and from London, good shopping facilities and plenty of high street restaurants all within close proximity to each other,” says Daniel Levenfiche of Yopa.

Visit trent-park.co.uk or call 020 3005 5590 for more details.

Three-bedroom apartments are also on sale at Elements in Enfield — a new scheme by the developer Countryside opposite Ponders End station. When completed it will deliver 1,000 new homes to the area as well as 71,000sq ft of new community facilities such as a gym and medical centre.

The site is a couple of minutes walk from several good schools including the Ofsted “good” rated Alma Primary School.

Three-bedroom apartments start from £449,995, with London Help to Buy available. To register your interest, visit elements-enfield.com or call Countryside on 020 3797 1868.

In central Lewisham, Peabody is selling three-bedroom open-plan flats from £575,000 at Centralis. Visit peabodysales.co.uk.

Lewisham has a vibrant street market from Monday to Saturday and is surrounded by parkland, including Blackheath, Royal Greenwich Park and also Hilly Fields, with tennis and basketball courts and a café.

Buying a forever home

Mark and Kat Baldwin used Help to Buy to purchase their second home
S Saunders / Digital Nation Photography

Mark and Kat Baldwin moved out of London in 2011 and bought their first home in Kent. Having saved for two years they initially planned on renovating their two-bedroom cottage and adding an extension — until they realised they could use Help to Buy to purchase their next property.

The entrepreneurial couple, now in their late thirties, run a digital learning agency called OnClick.

They sold their cottage and have used the government low-deposit scheme to buy a four-bedroom “forever” home at Windsor Meadow, in Marden, Kent, where they want to start a family.

Prices at Windsor Meadow currently start from £495,000 for a three-bedroom home and £539,950 for a four-bedroom home.

Help to Buy is available on selected properties. For more information, visit millwooddesignerhomes.co.uk or call the sales team on 01622 832576.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in