The UK government has introduced a number of initiatives to help first time buyers get on the property ladder. In this blog post, we’ll outline some of the main incentives that are currently available.
Help to Buy ISA
The Help to Buy ISA is a savings account that is specifically designed to help first time buyers save for a deposit on a new home. For every £200 that you save into the account, the government will top this up with an additional £50. This means that you can potentially receive up to £3,000 from the government towards your deposit.
Lifetime ISA
The Lifetime ISA is another savings account which can be used towards purchasing your first home or towards your retirement. With this account, you can save up to £4,000 per year and the government will top this up with an additional 25%. This means that you could potentially receive up to £1,000 per year from the government.
Help to Buy Equity Loan Scheme
The Help to Buy Equity Loan Scheme is aimed at helping first time buyers who have a deposit but are struggling to raise the remaining funds for a mortgage. Under this scheme, the government will provide an equity loan of up to 20% of the property value (40% in London), which can be repaid at any point during the mortgage term or when the property is sold.
Stamp Duty Land Tax Relief
Under current legislation, first time buyers are exempt from paying stamp duty on properties worth up to £300,000 (or £500,000 if the property is located in London). This means that first time buyers can potentially save thousands of pounds on their purchase.
Frequently Asked Questions
What happened to the Help to Buy scheme?
The Help to Buy Equity Loan scheme in England closed to new applications in October 2022 and completed its final transactions in March 2023. The Help to Buy ISA also closed to new accounts in November 2019, though existing account holders can continue saving until November 2029 and claim their bonus until November 2030. In Scotland, the equivalent First Home Fund closed in 2021 but has been replaced by the LIFT scheme which continues to support eligible first-time buyers.
What is the LIFT scheme in Scotland?
The Low-cost Initiative for First Time Buyers (LIFT) is a Scottish Government shared equity scheme that helps eligible buyers purchase a home on the open market. Under the Open Market Shared Equity variant, the Scottish Government can contribute up to 40 percent of the purchase price, meaning you only need a mortgage and deposit to cover the remaining share. The government’s share is repaid when the property is sold or when you choose to increase your ownership stake.
Is there a shared ownership scheme in Scotland?
Scotland operates shared equity rather than shared ownership schemes. The main difference is that with shared equity you own the whole property but the government or a housing association holds an equity stake, whereas shared ownership in England means you own a share and pay rent on the remainder. Scotland’s LIFT scheme and the New Supply Shared Equity scheme for new-build properties are the primary options available for buyers seeking affordable routes to homeownership.
Can I use Lifetime ISA savings towards my deposit?
Yes, you can use your Lifetime ISA savings including the 25 percent government bonus as part of your mortgage deposit, provided you are a first-time buyer purchasing a property worth up to £450,000. You must have held the account for at least 12 months before using it. If you withdraw the funds for any other purpose before the age of 60, you will face a 25 percent withdrawal charge, which means you would lose some of your original savings as well as the government bonus.
Are there any grants available for first-time buyers in Scotland?
There are no direct cash grants for first-time buyers in Scotland. However, the Scottish Government offers shared equity support through the LIFT scheme, and first-time buyers benefit from LBTT relief which means no tax is payable on properties up to £175,000. Additionally, the Lifetime ISA provides a 25 percent government bonus on savings up to £4,000 per year. Local authorities may also offer additional support or affordable housing initiatives in certain areas.
The UK government has introduced a number of initiatives to help first time buyers get on the property ladder. These include schemes such as the Help to Buy ISA, Lifetime ISA, Help to Buy Equity Loan Scheme and Stamp Duty Land Tax Relief. If you’re a first time buyer looking to purchase a property in the UK, make sure to research these schemes and see if you’re eligible for any of them. Scottish buyers should also explore the Scottish government schemes for first-time buyers for additional support.