Although there are existing first-time buyer (FTB) schemes, the lack of government schemes in the latter half of 2022 is concerning — not just logistically but financially.

During the course of the Help to Buy equity loan scheme, 369,104 properties were bought, according to government figures, with equity loans totalling £23.1bn.

Taking advantage of an FTB scheme is a great way to get on the property ladder, and thousands have reaped the benefits. Historically it has made it easier to afford a deposit or first home, or allowed for partial ownership until the buyer could afford the full mortgage.

First Homes sounds promising but caters to a niche group

While Zoopla predicts at least a 5% drop in house prices next year, rising interest rates may make it challenging to buy a home, so let’s consider what’s currently available.

First Homes

The First Homes scheme is targeted at FTBs and new homes. Those participating must buy a house that either is brand new and built by a developer or is an existing home that was originally purchased as part of the scheme.

However, although it sounds promising, it caters to a niche group of buyers. One’s combined household income must not be over £80,000 (£90,000 in London), one must be an FTB, and the home must cost less than £250,000 after the deposit has been paid (£420,000 in London).

Own New

The Own New scheme enables FTBs and movers to secure a new-build home or flat at 95% of the purchase price. A 5% deposit is required, leaving a 95% mortgage to be arranged with the lender. This option provides greater accessibility for those with more complex financial circumstances.

A slowdown is to be expected. Developers are holding back plots, focusing on completion

Deposit Unlock

Deposit Unlock too allows FTBs and movers to buy a new-build with a 95% mortgage and 5% deposit. Housebuilders pay to insure the mortgage, making lenders more comfortable with the higher loan-to-value. Developed by the Home Builders Federation (HBF), the scheme has more than 30 developer participants.

Help to Build

Help to Build could be promising, but the deadline for new applications closes in March 2023 (having opened only on 27 June). This is probably one of the shortest-running schemes the government has put in place. Like the First Homes scheme, you must be building your home from scratch to qualify.

What’s best?

So where are we now, considering Help to Buy has ended? A lifetime Isa is arguably the best solution but is geared specifically towards building a strong deposit. The First Homes scheme is probably the more favourable option for FTBs, but more must be done to bridge the gap left by the Help to Buy equity loan scheme.

The new-build market survived the pandemic and the withdrawal of the stamp duty cut

More uptake from prospective/current homeowners is needed to increase lender appetite for 95% deals. Extra affordability options are also required because buyers still need to be able to borrow the 95% loan.

The need to do more to help the new-build industry is supported by the HBF, which urges the government to “develop policies that will support demand for new homes and address the acute constraints we face”, adding “intervention is crucial to the prospects for FTBs”.

A lifetime Isa is arguably the best solution but is geared specifically towards building a strong deposit

We’ve seen a slowdown in new-build reservations in recent weeks, which reflects wider market uncertainty. But the new-build market survived the pandemic and the withdrawal of the stamp duty cut. The cooling is expected to continue into 2023, spurred by inflation and further interest rate increases.

We may see a fall in housing starts next year, with a slight upturn heading into 2024 (potentially the first step to better growth). However, Centrick proposes a surprisingly buoyant 2023 market. It predicts a quicker sales turnaround as the backlog from Covid eases, as well as only a minor dip in property values.

The lack of government schemes in the latter half of 2022 is concerning — not just logistically but financially

Despite National House Building Council data showing new-home registrations were up by a third in the third quarter (Q3) of 2022 compared to Q3 2021, a slowdown is to be expected. Developers are holding back plots, focusing on completion.

This creates a snowball effect as customers also hold off from registering. As a result, developers need to ensure that customers who have reserved their plot have the peace of mind and guarantee that they’ll move in to their new-build home, helping to restore confidence in a period of uncertainty.

Mobeen Akram is national new homes account director at Mortgage Advice Bureau