Help to Buy Is Back… Sort Of.

The last government’s Help to Buy scheme ended in 2023 – a scheme that allowed buyers (by the end, first-time buyers only) to purchase property with smaller 5% deposits topped up by a government-backed loan – and so far it is something which the current government has not chosen to revisit.

Now, however, and ostensibly due to ‘frustrations’ with the status quo, two of the UK’s biggest housebuilders – Barratt Redrow and Persimmon Homes – have teamed up with Barclays and TSB to launch their own 5% deposit scheme – a scheme they are calling the ‘Rezide Equity Loan’.

At first glance, it looks a lot like Help to Buy, with many buyers – and especially stretched first-time buyers – wondering if it could spell the answer they’ve been looking for.

That said, there are some key differences buyers should understand before diving in.

What did the old Help to Buy Scheme offer first-time buyers in Swindon?

The government-backed Help to Buy scheme, launched in 2013 and administered by Homes England, was designed to help buyers purchase a new-build home with a smaller deposit. It was not only first-time buyers, as many think, although from 2021 until the scheme closed in March 2023 it became restricted to first-time buyers only.

Under the scheme, in any case, buyers needed to put in a deposit of just 5% of the property price upfront, with the government providing a 20% equity loan (or up to 40% in London). The remaining 75% (or 55% in London) came from a standard mortgage.

Crucially, the government loan was interest-free for the first five years, making it far more affordable in the short term. After that, buyers paid a low, rising rate of interest until they repaid the loan, either when selling the property, remortgaging, or clearing it in full.

Help to Buy made homeownership achievable for hundreds of thousands of people who couldn’t otherwise save a large deposit – quite literally! A Government report stated that 514,868 property purchases had been made under the scheme, £786 million of property sales, and at the same time it helped developers sell new homes quickly, encouraging the construction of more new sites.

However, critics argued that it artificially pushed up the prices on new builds and left some buyers struggling to remortgage when the interest-free period ended, due to that sense of falsely inflated equity from the outset.

Nevertheless, when the scheme wound down in 2023, it did leave a gap in the support for first-time buyers and reduced their ability to get on the ladder. This is the space that this Rezide scheme and any others that might follow are now trying to fill.

What Is the Rezide Equity Loan Offering?

The Rezide scheme lets you buy a new-build home, specifically from Barratt Redrow or Persimmon Homes, with just a 5% deposit – and there are various developments across Wiltshire and the South West of England as a whole being developed by these two behemoths of UK housing, where this scheme could potentially work for local buyers. But just because it could work for buyers, should they rush to take it up?

Here’s how it works:

• The buyer puts down a 5% deposit
• The buyer takes a 15% equity loan from Ahauz, an FCA-regulated mortgage lender (and this loan is backed by the developers and lenders). This is capped at £100,000.
• The remaining 80% comes from a standard mortgage with either Barclays or TSB

The equity loan carries a 4% fixed interest rate for the entire term and can be repaid when the buyer either sells the property or remortgages. There are no early repayment penalties, and it’s open to both first-time buyers and existing homeowners alike.

Why It Sounds Appealing

In today’s market, saving even a 10% deposit can feel like climbing a mountain. Here in Swindon, where our average asking price is currently £283,496 according to Rightmove, that means over £30,000 on average needs to be saved, to also cover moving costs, survey fees, legal fees etc – or a little more if they are not a first time buyer and therefore subject to stamp duty.

There are 95% mortgage options out there, where a 5% deposit will suffice, but better deals tend to come through once there is a 10% deposit provided – and better still once the deposit is at 15%, 20% or better.

A 5% deposit option topped up with a 15% equity loan, backed by big names such as these, might sound like the helping hand many people have been waiting for, especially as mortgage rates remain relatively high – inching upwards towards 5% again on average this month, for the first time since February this year, as reported by the BBC and others in the last few days.

As a result, affordability clearly continues to bite.

For some buyers, it could seem to be the difference between getting on the ladder now or waiting another year or two.

Limited Choice and Higher Cost

Despite the appeal, there are reasons to take a moment to stop and think, because as attractive as it may seem in certain respects, there are restricting factors and costs to consider.

The biggest limitation is that buyers can only use the scheme on new-build homes from those developers.

That means buyers potentially having to compromise on:

• Location – there may be no Barratt Redrow or Persimmon developments in a buyer’s preferred area. There are a number across the South West – but are they right and in the right area for you and your family, or are you compromising just because the scheme fits?
• Size or layout – new builds might prioritise compact design over space
• Value for money – new homes usually carry a premium price tag, and this is a criticism that has been levelled at new-build sales under the previous government-backed scheme
• Equity loan – this means that the value of the loan isn’t fixed, but fluctuates over time; if the property value goes up, the size of the equity loan increases.

It is also worth considering that 4% interest rate. It might well seem reasonable - but it is not interest-free, unlike the original Help to Buy loan which offered a five year grace period.

Over time, that extra cost adds up – although, currently, 4% is still less than the average mortgage rate that first time buyers tend to be able to take – especially those with 5% deposits.

However, if mortgage rates do fall further – and cuts to the Bank of England base rate are expected over the next few months – the average mortgage rate could conceivably drop to below 4% (as mentioned already, it is currently back up at around the 5% mark – BBC).

Think Before You Leap

It’s encouraging to see the private sector step up with creative solutions, but it’s still a developer-backed incentive – and something that ultimately has been conceived and designed in order to sell their properties.

Before signing anything, always:

• Speak to an independent mortgage adviser to compare your options. Look at the monthly difference; is it worth paying extra to buy a home you really want? If you need a recommendation to an independent adviser, we can help.
• Get a full affordability check – don’t stretch your budget just because a scheme makes it possible.
• View comparable homes on the open market to make sure you’re not limiting your choices unnecessarily.

Our Take

It’s good to see innovation returning to the housing market, but affordability schemes aren’t a one-size-fits-all fix.

If you’re buying your first home, take the time to explore every option, including smaller properties, different areas, or other types of shared ownership schemes.

The right move for you isn’t just about what’s possible on paper; it’s about finding a home that truly fits your life.

At The House Group, we’re always happy to offer an honest perspective on your next step. Whether you’re buying, selling, or just starting to plan, our Swindon team is here to help you make your next move with confidence.