With Help to Buy in the news, we thought we’d discuss the subject from a Land Registry point of view.
Phase 1 of the scheme has been up and running since 1 April. Under this scheme an eligible buyer can get an equity loan worth up to 20% of the value of a new property. Unlike ordinary mortgages where you pay back the loan and interest, equity loan borrowers pay back a percentage of the value of the property when they sell it. If the property goes up in value, they will pay more. If it goes down they will pay less.
Equity loans are registered with us as charges. They are registered in the name of the Homes and Communities Agency, who administer the scheme on behalf of the government. Their website has the template equity mortgage deed they use.
Phase 2 has just launched and works in a different way. Instead of an equity loan, lenders can (for a fee) get the government to guarantee some of their losses if their borrower defaults. The idea is to encourage them to lend a higher percentage of the value of the property, and so reduce the amount of deposit required by the buyer.
In Land Registration terms there is nothing to register other than the lender’s mortgage deed, because this is just an arrangement between the lender and the government. So, unless lenders decide to use a specific “Help to Buy” mortgage deed template, it is possible we won’t even know when Help to Buy phase 2 is being used.
As and when we have more information to share, we’ll post here, but in the meantime, please feel free to add your comments or advice below.