A Brand New Help To Buy Scheme For London’s First Time Buyers

Help To Buy equity loan scheme offers opportunity to move out of the suburbs and live in a luxury development in centre of the capital.

A new Help To Buy scheme for Londoners has given people who are saving for a deposit on a first home the opportunity to move out of the suburbs and live in a luxury flat in the centre of the city.

Estate agent Williams Lynch, which sells new-build developments near London Bridge, explains that the London-only Help To Buy equity loan scheme allows first-time buyers who raise a 5% deposit for a new-build property to borrow up to 40% of the purchase price from the government.

The 40% government loan is interest-free for five years, and after that time borrowers will be charged a fee of 1.75% of the loan’s value. This fee will increase every year at 1% above the rate of inflation.

However, luxury property specialist Plaza Estates warns that for anyone who sells a property before the 40% loan is paid off, the proceeds of the sale must be used to settle the debt and not fund another purchase.

Although the London-only Help To Buy equity loan scheme, which launched in February, is open to people who have previously owned property, its rules state: “You must not own any other property at the time you buy your new home.”

Other conditions attached to the deal include…

  • The new-build property must be in a London borough or the City of London
  • The purchase price must be no more than £600,000
  • Purchasers must live in the property and not sub-let it

The majority of people using the London Help To Buy scheme are expected to purchase flats in the capital.

Central London estate agent LDG says research indicates there are more than 75,000 developments containing flats in the pipeline, spread throughout Camden, the City, Hackney, Hammersmith & Fulham, Islington, Lambeth, Southwark, Tower Hamlets and Wandsworth.

The dilemma facing anyone buying a new-build unit is whether to live on the top, middle or ground floor. 

Many developers of new-build flats in London reserve the top floor for luxury penthouse units, says Belgravia-based estate agent Best Gapp

The top floor of a development is often favoured because residents have the best views and the added height means these units have more natural light.

The only thing to watch out for, however, is to ensure the development has a lift. Top floor properties in older developments that do not have the luxury of a lift are worth less than units on the ground floor.

The middle floors of new-build developments are often considered to be the safe option. Not only do they offer more security than ground floor properties, but they can be cheaper to run because they absorb heat from homes above and below.

Ground floor flats suffer from the Marmite factor – buyers either love them or hate them. In developments without lifts, ground floor properties can command higher rents because they are quicker to enter and leave, according to data from London-based rent guarantee specialist Assetgrove.

They also offer residents easy access to outdoor communal areas, such as gardens or parking. 

The downside, however, is they are considered a greater security risk, residents can be disturbed by visitors to other units and noise from street level, while the views are not a patch on those from the top floor.