Selling a Help to Buy Property: Complete Guide
The UK government has launched several schemes over the years to help first-time buyers step onto the property ladder. From the Help to Buy ISA to the First Homes Scheme, many people have benefited from additional support. But what happens when you want to move on?
Selling a Help to Buy property comes with a few extra steps. Whether you’re selling Help to Buy property within 5 years or much later, we’ll explain exactly how to do it, from repaying your loan to completing the sale.
What is the Help to Buy scheme?
The Help to Buy scheme was introduced to support homebuyers by reducing upfront costs. It worked by providing an equity loan of up to 20% of the property’s purchase price (or up to 40% in London). Buyers only needed a 5% deposit, with the rest covered by a traditional mortgage.
Key features of the scheme:
- 5% deposit required
- Government equity loan up to 20%
- No interest charged for the first five years
- Scheme now closed to new applicants (as of 2021)
Despite the scheme closing, thousands of people still live in Help to Buy properties and are now wondering about the process of selling a Help to Buy house.
Can you sell a Help to Buy property?
Yes, selling a Help to Buy property is absolutely possible, but slightly more complex than a typical house sale.
The key condition? You must repay your Help to Buy loan before or during the sale. This repayment is based on a percentage of your home’s current market value, not the original amount borrowed.
This means that if your house has increased in value, you’ll repay more than you borrowed.
Selling Help to Buy property within 5 Years – what you need to know
Many homeowners consider Help to Buy selling within 5 years to avoid interest charges on their equity loan. The first five years are interest-free, so it makes financial sense to sell before interest starts to accrue.
After five years:
- You’ll be charged interest at 1.75%, rising annually with CPI + 2%
- For earlier versions of the scheme, interest is RPI + 1%
Selling during this period can save you thousands of dollars in interest payments, making selling a Help to Buy house within 5 years a popular choice.
What if I’ve already paid off the Help to Buy loan?
If you’ve repaid the equity loan in full through staircasing, your sale is treated like a normal property sale. Staircasing means buying back equity in your home from the government in minimum 10% increments.
You must first instruct an RICS-accredited surveyor to conduct a valuation, as repayments are based on market value at the time of staircasing.
Staircasing example:
- Purchase price: £300,000
- 20% Help to Buy loan = £60,000
- New valuation: £350,000
- You repay £35,000 to staircase 10%
- Remaining loan: 10% of new value
Once the loan is fully repaid, selling Help to Buy property becomes much simpler.
How much will I repay when selling a Help to Buy property?
The amount you repay depends on your property’s current value. The Help to Buy loan is based on a percentage, not a fixed sum.
Example scenario:
- Original value: £150,000
- 20% Help to Buy loan = £30,000
- Current valuation: £225,000
- Repayment due: £45,000 (20% of £225,000)
If the property has dropped in value, your repayment decreases too. You’ll pay 20% of the lower valuation or sale price, whichever is higher.
This is why selling Help to Buy property within 5 years can be financially strategic – especially if your home hasn’t appreciated much in value yet.
Step-by-step guide to selling a Help to Buy property
Step 1: Put the property on the market
Start by listing your home with an estate agent. Let them know your property was bought with Help to Buy, as it adds an extra layer to the process.
Step 2: Accept an offer and instruct a RICS valuation
Once you’ve accepted an offer, you must obtain a Help to Buy valuation from a RICS-accredited surveyor. This typically costs around £200–£250 and is valid for 3 months.
You’ll need to send these to your Help to Buy agent in order for them to calculate the repayment:
- The valuation report
- A copy of the offer
Step 3: Receive your redemption letter
The Help to Buy agent will then issue a redemption statement showing:
- How much you originally borrowed
- The repayment amount based on your current valuation
- How to repay the loan before completion
This is also sent to your solicitor or conveyancer.
Step 4: Complete the sale and repay the loan
When the sale completes, your solicitor will:
- Deduct the Help to Buy repayment from the sale proceeds
- Transfer the remaining funds to you
You cannot complete the sale without repaying the Help to Buy loan; doing so would violate the scheme’s legal terms.
When can I sell a Help to Buy home?
You can sell a Help to Buy property at any time; there’s no minimum ownership period. That said, many choose Help to Buy, selling within 5 years to avoid interest charges.
Need to sell a Help to Buy property quickly?
If you are looking to sell a Help to Buy property but are fast approaching the end of the interest-free period, we could help. We sell your house fast, in a timeframe that aligns with your exact needs. This means you can clear your Help to Buy loan and make plans for your future without worry.
We buy any house and do it without charging you a penny. We do it extremely quickly, too. We can buy your home in as little as seven days if it suits you, or we can take longer if you need to get your affairs in order. Call us today, and let’s get your house sold.
