We are passionate about supporting developers and selling new homes. In this fourth instalment of our ongoing blog series, 'Why Buy New?', we delve into the numerous advantages of investing in a new build property, from financial savings to social benefits.
Part Exchange and Assisted Move
These two options are designed to simplify the process of selling an existing home and facilitate the purchase of a new build. Our partner LSL Land & New Homes handle both the Part Exchange and Assisted Move schemes which offer buyers the opportunity to receive help from the developer in selling their home, provide expert advice and allow buyers to reserve a new build home sooner. These options streamline the moving process, making it quicker, less stressful, and potentially more cost-effective.
Deposit Unlock
Launched in 2021 as a response to the end of Help to Buy, Deposit Unlock was devised by the House Builders Federation in collaboration with several lenders independently of government involvement. It allows buyers to purchase a new build home with only a 5% deposit but with a better interest rate than a 95% loan. The house builder contributes a percentage of the purchase price into an insurance policy for the mortgage provider, reducing the lender's liability and, subsequently, the interest rate. This scheme is open to all buyers, not just First Time Buyers, provided they are purchasing their main and only home and are borrowing a maximum of £750,000.
Mortgage Guarantee Scheme
Similar to Deposit Unlock, this scheme also offers the option of buying a home with only a 5% deposit to all buyers, but this version has government involvement. The government guarantees 15% of the loan, providing assurance to mortgage lenders in case buyers default on their mortgage. With thousands of households already taking advantage of this scheme, it remains open until December 2023.
First Homes Scheme
Targeted specifically at First Time Buyers and Key Workers, the First Homes Scheme offers new build homes for sale at a 30-50% discount. This reduced rate applies again when the property is sold, making it an appealing option for eligible buyers. However, there are specific eligibility criteria, including earning less than £80,000 as a household (£90,000 in London), and the property's cost must not exceed £250,000 (£420,000 in London).
Shared Ownership
A scheme that benefits both buyers and developers by reducing the hurdles to home ownership; Shared Ownership is open to those with an income below £80,000 who are unable to purchase a home at market value, subject to specific eligibility criteria. Buyers can purchase a share of the home, requiring a smaller deposit, and they pay a proportionate rent on the remaining share. They can then gradually increase their ownership share, staircase up to full ownership, over time.
Rent to Buy
Under this umbrella, various schemes exist depending on the provider and location. In England and Northern Ireland, people can rent a new build home at approximately 20% below market rent for up to 5 years, using the saved money to build up a deposit to eventually purchase a share or the entirety of the property. In Wales, people rent at market value, and after 2 to 5 years of occupation, they have the opportunity to buy the property, receiving back 25% of the rent paid and 50% of any increase in the property's value to use as their deposit.
Co-Own (Northern Ireland)
Co-Own is a shared ownership plan set up by a not-for-profit organisation, Co-Ownership. The main aim for Co-Ownership is to offer support in getting you on the property ladder in Northern Ireland. The idea of the ownership plan is that you buy a share of the property that you can afford and Co-Ownership will cover the rest.
Rent to own (Northern Ireland)
Rent to Own is an alternative path to owning a home, which may be right for you if you are unable to get a mortgage to meet the house price or you are not eligible for Co-Own. Rent to Own is a 3 year plan to get from renting the property to owning it. The difference between traditional renting and Rent To Own is that you choose a new build property and Co-Ownership will buy it and rent it to you for the first 3 years. The 3 year plan aims to allow you to then buy your home, either with a mortgage or the Co-Own shared ownership plan.
Developer Incentives
Apart from the schemes, developers often offer incentives to buyers, such as paying Stamp Duty (or Land Tax) fees, covering legal fees, providing free upgrades like flooring and appliances, or offering cash or gift cards for furnishing the new home. Some incentives may even complement existing schemes, like paying a few months' rent on a Shared Ownership home. While incentives are typically subject to eligibility criteria or a matter of luck, they are worth considering to reduce initial costs and enjoy extra perks.
Schemes and incentives significantly expand the options available to buyers when purchasing a new home. While some schemes have specific eligibility criteria, developers are often willing to provide a helping hand through options like Part Exchange or Assisted Move. So, why buy new? Because new build homes can offer an abundance of buying options that can enhance your home ownership journey. Consider exploring these schemes and incentives when searching for your dream home.
For developers, these schemes can help buyers to purchase a new build home with a smaller deposit, a lower mortgage rate, or a discounted price.
For more information speak to your local branch, or, to find new build homes in your area use the link below.
Source: LSL Land & New Homes
The Reeds Rains Content Marketing Team
