Help to Buy Wales has been extended for another two years, the Welsh Government has announced. The scheme, which helps first-time buyers get a property, has been introduced with a new price cap of £300,000 from April 2023.
Since its launch in 2014, the scheme has offered shared equity loans of up to 20% of the purchase price of new builds and delivered on more than 13,400 homes. While applications to Help to Buy in England has closed since October, in Wales the current phase of the scheme, which has a price cap of £250,000, is due to close to applications at the end of March 2023.
A new version of the scheme with a higher price cap is set to be introduced in April and will be available to applications until March 2025. According to Julie James, Minister for Climate Change, the new price cap with be in line with increases in average house prices in Wales.
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The extension has been developed with the support of UK Finance, the Home Builders Federation, the Federation of Master Builders and the Development Bank of Wales. All home purchased with the support of the scheme will need to reach a minimum of Energy Performance Certificate (EPC) B.
In a statement on Wednesday, the minister said: "It is important to ensure that the extension to the scheme takes account of changes in the housing market, the impact of the current economic climate on potential home-owners and the housing industry.
"The Welsh Government wants to ensure support for potential new home-owners continues to be relevant and targeted at those who most need it, particularly in these economically challenging times.
"I have asked my officials to commission research into the future needs of home buyers, and the role Help to Buy Wales can play to meet those needs. The research findings, which will be available in the summer, will underpin future planning to support people wishing to buy a home.
"In making this announcement today I am providing certainty to people who are hoping to buy a home and offering support to more than 90 developers and SMEs registered to deliver the scheme."
How does Help to Buy work?
In Wales, Help to Buy provides a shared equity loan to buyers of new-build homes. As it stands, you must provide a 5% deposit, in return the scheme provides a shared equity loan of up to 20% of the purchase price and then you must take out a repayment mortgage to cover the remaining cost.
For example, if a first-time buyer wanted to buy a property worth £200,000, they would need a cash deposit which amounted to £10,000 (5%), the shared equity loan would amount to £40,000 (20%) and their mortgage would amount to £150,000 (75%).
If a first-time buyer was to buy a house worth £300,000 come April 2023, they would need a cash deposit which amounted to £15,000, the shared equity loan would amount to £60,000 and their mortgage would amount to £225,000.
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