Housebuilders offers new support schemes for homebuyers

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With the Help to Buy scheme now closed to new applications and no sign of another Government-led replacement as of yet, many first-time buyers are feeling panic about the scarce options of support available to purchase a property. However, housebuilders and property investors are now offering solutions that many could benefit from.

Despite the recent dip in demand, house prices are still soaring through the roof with properties averaging £366,999, according to Rightmove’s recent House Price Index.

Both credited and criticised, the Government’s Help to Buy scheme [link express] offered a strong solution for many first-time buyers who would have initially found such prices untenable.

But with the scheme’s closure to new applicants in England taking place on October 31, 2022, homebuyers may be wondering what other options they have.

With the Government scheme having now ended, a number of homebuilders and investment platforms, such as St.Modwen Homes, Kettel Homes, and Chesnut Homes, to name a few, are stepping in with their own new schemes to lend to first-time buyers.

St. Modwen Homes

British-based property investment and development business, St. Modwen Homes, has unveiled two unique schemes – and a “Deposit Boost” to help.

The two schemes, “Deposit Unlock” and “First-time Buyer Boost” offer two different options to support.

Deposit Unlock scheme

Designed to help people buy a home sooner rather than later, this scheme allows first-time buyers as well as next-home buyers to purchase a new-build home with just a five percent deposit, and customers will have access to competitively priced mortgage products.

St Modwen Homes commented: “This ultimately makes it more affordable for those purchasing their first home, as homebuyers can access a low-deposit mortgage at competitive interest rates.”

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First-time Buyer Boost scheme

To support first-time buyers, St. Modwen Homes is offering a First Time Buyer Boost, which includes a range of benefits to make purchasing a new home easier and more affordable.

This scheme allows homebuyers to reserve a property for just £99 – meaning they don’t have to worry about large upfront costs.

The housebuilder also pledges to cover up to £1,000 of the solicitor fees and lets buyers choose the flooring throughout the new home from St Modwen’s range, “completely free of charge”.

Deposit Boost incentive

Getting a deposit together isn’t always an easy job, and with the current cos of living crisis, many households are feeling the pressure of diminishing disposable income.

To support first-time buyers as well as existing homeowners looking to move, St. Modwen Homes offers a Deposit Boost incentive on selected developments and plots. As part of this, the housebuilder will gift £5,000 towards the deposit, so buyers may not need to save as much as they originally planned.

Speaking on what inspired the initiatives, Jo Winston, sales and marketing director at St. Modwen Homes, told “Both our ‘Deposit Boost’ and ‘First Time Buyer Boost’ schemes were designed with buyers in mind.

“We understand that each prospective homeowner comes with different wants, needs and financial situations – and for this reason, we wanted to create a variety of schemes for our customers, to suit their individual buying journeys.”

Ms Winston continued: “For instance, our Deposit Boost scheme was created to support both first-time buyers and existing homeowners looking to buy a new home. The contribution from St. Modwen Homes allows buyers to put down a larger overall deposit, which helps them access competitively priced mortgage products. It also alleviates some financial stress as they may not need to save as much of a deposit as they originally planned.

“Our First Time Buyer Boost was created as an alternative to the Help to Buy scheme. It goes without saying that Help to Buy was great at enabling first-time buyers to get onto the property ladder. However, we understood that not every first-time buyer wanted to use the scheme – for example, those looking to purchase with a bigger deposit.

“We wanted to give prospective homeowners a scheme that suited their preferences and needs, whilst still relieving the pressure of the many fees that come with buying a home.
“So far in 2022, we’re proud to say that 184 people have secured their St. Modwen home with our First Time Buyer Boost scheme.

“Thanks to the initiative covering bigger upfront costs such as solicitor fees, we expect this to continue to be a popular choice amongst first-time buyers as it supports with financial freedom.”

Kettel Homes

Kettel Homes investment platform aims to help buyers “move in without a mortgage”. Kettel purchases existing freehold single-family homes between £125,000 and £400,000, allowing first-time buyers to step onto the ladder with a minimum deposit of two percent.

Kettel then rents homes back to them at market rates while they save for a deposit, build their credit and expand their affordability. The initial two percent will also be put towards the overall deposit if they choose to purchase.

The rental period lasts for 36 months before smoothly allowing the renters to transition into owning the property.

Over the course of the 36 months, Kettel promises fixed rent prices, and it will also help design a savings plan to build a 10 percent deposit to help the renter buy the home at the end of the rental period.

Speaking on Kettel’s launch in the summer, CEO and co-founder, Trevor Stunden, exclusively told “It was a personal challenge that I and my cofounders faced when we were looking to get onto the housing ladder a number of years ago and it’s a challenge that resonated in our friends. It’s a conversation that, if you’re anywhere between your early twenties and late thirties, comes up almost constantly at barbeques and lunches and hanging out with friends.

“How do you navigate the challenges of getting onto the housing ladder? Because in the UK, we’re very much a nation of homeowners and it’s that sort of dream that everybody wants to achieve. So, yes, very much a personal challenge we all faced.”

However, Mr Stunden continued: “We felt it was something that we could help solve, and that’s why we launched Kettel.”

Following some focused research involving hundreds of first-time buyers, Kettel found “three main archetypes” that needed the most help; those who wanted to “set and forget”, those who didn’t fit the typical underwriting of lenders and had unusual employment, either gig economy or self-employed, and those who had underdeveloped credit, or a past credit hiccup.

Mr Stunden said: “We thought if we launch ourselves into the rent-to-own product and build that, it’s a way for us to create a clear pathway for our customers to be able to get onto the homeownership ladder within a 36-month period.

“We are live in Birmingham, Coventry, Leicester, and Nottingham areas and we have purchased our first double-digit numbers of properties.

“We’re now in the position where we’ll be launching our second fund, which allows us to buy the next couple hundred for our customers. Again, in that area. And we’ll be moving up to launch in areas such as Manchester, Leeds and Liverpool in the next 12 months.”

Chesnut Homes

Housebuilders Chestnut Homes, based in Lincolnshire, offer the First Homes scheme, which allows buyers to own 100 percent of their home but pay 30 percent less than its market value, with the Government supplementing the rest.

The discount will apply to the home forever, meaning that generations of new buyers and the local community will continue to benefit every time the property is sold. However, when selling, the home must be sold to another first-time buyer at 30 percent less than the market value at the time of sale.

To be eligible for the scheme, buyers must be able to get a mortgage for at least half the price of the home and be part of a household where the total income is no more than £80,000.

A number of housebuilders are offering the Government-backed First Homes scheme, including Gleeson Homes, and Countryside, to name a few.

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