A new scheme has been unveiled by the UK government, which will supposedly assist “thousands” of first-time buyers looking to get on the property ladder. Though unlike traditional Help to Buy schemes, this new initiative offers support to those who plan on building their own homes from scratch.
Named Help to Build, the programme will reduce the immediate costs of building a home by offering those who take advantage access to lower-deposit mortgages with fixed introductory interest rates.
The scheme was officially announced last week by the Department for Levelling Up, Housing and Communities, and £150 million has been set aside to help those who qualify.
First-time buyers are finding it increasingly difficult to get on the property ladder, with average house prices having once again surged to all-time record-highs in April – £281,000. Over the course of just 12 months, the average price of the UK home has increased by more than £31,000, pricing more prospective buyers than ever before entirely out of the market.
What is Help to Build?
Help to Build provides those looking to build their own homes with the opportunity to access a special mortgage of up to £600,000, which can be secured with a deposit of just 5% and offers the first five years interest-free. This 95% LTV mortgage will only be available through a selection of approved lenders, and the scheme is being managed by Homes England.
In a similar way to property development finance, Help to Build mortgages will be issued in a series of stages, coinciding with the completion of key phases of the construction project. The maximum loan available will be £600,000 to cover the costs of the land and the home’s construction, or £400,000 on build costs alone where the land is already owned.
“Through the Help to Build scheme we will help thousands more people onto the property ladder by giving them the opportunity to build homes that are perfectly tailored to their needs and in the communities they want to live in,” said Housing minister Rt Hon Stuart Andrew.
“This innovative scheme will build on our work to break down the barriers to homeownership, as well as creating new jobs, supporting the construction industry and kickstarting a self and custom build revolution.”
Who Can Apply?
While the scheme is designed to appeal primarily to first-time buyers, it will also be open to anyone interested in building their own home in England. In order to qualify, applicants will need an excellent credit score, a detailed breakdown of the project’s estimated costs and evidence of full planning permission from the relevant authorities.
In addition, the newly constructed home must be the sole residence of the mortgage holder – the scheme is not available to those looking to build a second home, or a BTL home.
After the first five interest-free years, interest will apply starting at 1.75% in the sixth year, and rising annually thereafter.
“Self-build isn’t the preserve of the wealthy, and Help to Build makes it more practical and accessible than ever before for people to build their dream home,” said Andrew Craddock, Darlington Building Society chief executive.
“This scheme also opens up the opportunities to first-time buyers. It is a fantastic example of the market moving with the times, and people’s changing wants and needs.”