Government help schemes for first time buyers

Two Government schemes were launched in April 2021 with the aim of helping first-time buyers onto the property ladder.

First-time buyers with small deposits will be able to purchase a home under the Help to Buy: Equity Loan scheme, set to run from April 2021 until March 2023.

The scheme, which replaces a previous similar offer, will allow those buying a new home from builders registered with the scheme to borrow between 5 and 20 per cent of the purchase price from the government, to top up the amount their lender is prepared to put forward. For those in London, there is the opportunity to borrow up to 40 per cent.

Regional price caps

The scheme imposes regional maximum prices on properties that can be purchased, as follows:

North East£186,100
North West£224,400
Yorkshire and the Humber£228,100
East Midlands£261,900
West Midlands£255,600
East of England£407,400
South East£437,600
South West£349,000

How the equity loan scheme works

The first-time buyer is required to put down a deposit of at least 5 per cent, while the government will contribute up to 20 per cent (or 40 per cent for London properties).

The government does not require any interest to be paid on the portion it loans to the buyer for the first five years. After this time, interest is payable. No capital is repaid, meaning the whole sum owed will not reduce.

Repayment can be made at any time, but a minimum of 10 per cent of the value of the property must be repaid at any one time. Otherwise, the loan must be repaid at the end of the term or in the event that the property is sold.

The amount repayable will be calculated by reference to the market value of the property at the time of repayment. This means that if the property increases in value, the amount to be repaid to the government will also increase.

The mortgage guarantee scheme

The government has also launched a mortgage guarantee scheme with the aim of increasing the range of 95 per cent loan-to-value mortgages available.

The government will guarantee the part of a loan over 80 per cent, up to a maximum of 95 per cent of the price payable for the property. In the event that a borrower defaults, the government will pay the guaranteed part of the loan to the mortgage lender.

This scheme is available to all first-time buyers (not just those buying a new build home), with a maximum purchase price of £600,000. A first-time buyer cannot have previously owned a home, either in the UK or overseas.

The scheme is initially intended to run until December 2022. Lenders who have stated they will participate include HSBC, Lloyds Bank, NatWest, Barclays and Santander.

If you are thinking of buying or selling a property and would like to speak to one of our expert lawyers, ring us on 0345 2413100 or email us at

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