Help to Buy was a scheme created by the government in England. It was to help first-time buyers buy a newly built property. They only needed a 5% deposit by offering an equity loan of 20% (or 40% in London) of the property’s purchase price. This equity loan was interest-free for the first five years.
The loan had a few restrictions where the region of England determined the maximum price you could pay for a property. Also, the loan must only be used to purchase a new build main residence. If not it could be revoked if used for buying a second home to be used or rented out. [1]
Since the scheme’s inception on the 1st April 2013, it has helped more than a quarter of a million people. This resulted in 272,852 property sales to have been completed. [2] Unfortunately, this scheme ended in March 2023 with no word on whether it will ever return. This is due to various reasons, but the main one being the causation of artificially inflated prices of new homes being built resulting in the property developers to benefit the most.
Fortunately, there is a similar alternative to the help to buy. The Lifetime ISA (LISA) that offers a similar 25% bonus on savings, with a cap of £1000 interest per year for first time buyers. However, the LISA had been slow in gaining savers due to a few restrictions. For example, such as being penalised the bonus if the savings are withdrawn before the age of 60 and using it for other means. [3]
So there is a short overview on the history of help to buy. If you are looking to buying an affordable home why not take al look at shared ownership houses.
References
[1] https://www.moneyhelper.org.uk/en/homes/buying-a-home/help-to-buy-scheme-everything-you-need-to-know
[2] https://www.gov.uk/government/news/help-to-buy-scheme-extended
[3] https://www.unbiased.co.uk/news/mortgages/when-does-help-to-buy-end-what-will-replace-it
