Posted on: 17 Jan 2023 by Jack Pye, MRICS

When to get a Help to Buy Valuation?

First introduced in 2013, Help to Buy is a government programme that aims to help first-time buyers and those looking to move home to buy a property. Although it features several initiatives, key elements of Help to Buy are the equity loan scheme which helped many buyers afford their home and which has to be paid back when the property is sold.

As a Help to Buy owner, you’ll be required to get a Help to Buy valuation when you sell or remortgage. Doing this at the right time and choosing the right valuer could significantly impact the sale, so what should you take into account when selling a Help to Buy home?

What is the Help to Buy equity loan scheme?

The Help to Buy equity loan scheme was available for new-build homes valued at less than £600,000 in England and £300,000 in Wales. The scheme closed to new applications on 31 October 2022, and purchases must be completed by 23 March.

As part of the scheme, when purchasing a qualifying property, the government would provide an equity loan for up to 20% of its value (40% within London) if the buyer could provide at least a 5% deposit. A mortgage from a commercial lender would be needed to cover the rest of the property’s asking price. The aim was to provide a way for those struggling to buy a home to get a foot on the property ladder.

The loans are interest-free for the first five years, after which they will initially be charged at 1.75% interest - with the fee increasing each year by RPI plus 1%. As with many mortgages, they must be repaid within 25 years, although you can pay off your loan at any time. This means it’s worth keeping an eye on the property market and your home’s value; the more it increases, the more you’ll have to pay back. This also makes an accurate valuation essential.

When do I need a Help to Buy Valuation?

If you bought a home with a loan through the Help to Buy scheme and are looking to repay, remortgage or sell your property, then you are required to get an independent Help to Buy Valuation report from a RICS-qualified valuer.

It’s important to note that a Help to Buy Valuation is only valid for three months, so it’s generally advised that you wait until you have accepted an offer before arranging a valuation if you’re selling the property. An additional desktop valuation will be needed if the sale has not been completed within three months. This can be provided by the original surveyor, who is not required to revisit the property but will have to reconfirm the valuation. If this has changed, then further comparable evidence will be needed by Target, which administers the scheme.

You will also need a Help to Buy valuation if you want to ‘staircase’, increasing the share of the property you own by partially repaying the loan without selling the home.

What does a Help to Buy valuation involve?

A Help to Buy valuation will determine the amount repayable in direct proportion to the property’s current market value. It must be conducted by a RICS-qualified surveyor. It’s worth noting that Target will base the repayment figure on whichever is higher out of the RICS valuation or the agreed purchase price.

Once you’ve found a RICS-qualified surveyor to conduct the valuation, they’ll visit your home to assess its condition, just like if a property is sold on the open market. They will consider internal and external elements of the property, its condition, age, size and features. Research is then carried out to find a minimum of three comparable properties in the local area. These must be like-for-like in terms of property type, size and age and must be located within a 2-mile radius of the property being inspected. The report will include their sale prices to support the valuation.

This information, along with the valuation and any evidence and assumptions used, will then be recorded in the valuation report.

What criteria do Help to Buy valuations need to meet?

In addition to being compiled by a RICS-qualified professional, there are several other criteria that Target insists are met when carrying out a Help to Buy valuation. This includes that the valuer must be independent of the estate agent and not be related or known to the client. A copy of the valuation report, on headed paper and signed by a member of RICS, must also be posted directly to Target and supplied to the client.

Who pays for the Help to Buy valuation?

The valuation will be paid for by the person selling the property. Expect to pay in the region of £300-800 depending on size of property.

The Novello Approach

Novello’s efficient and reliable team of RICS-qualified surveyors and valuers are here to help whether you want to sell a Help to Buy home or redeem your loan. Our cost-effective valuations will give you an independent assessment of your home’s current market value so you can decide if now is the right time to redeem your loan or sell your house.

Our responsive, experienced team is always on hand to discuss your options, and we’ll deliver your valuation report in just a few days so you can proceed confidently. With our impartial reports, you’ll be clear on how much you’ll be entitled to if you sell your home and how much you’ll need to repay to settle your debts, all of which will help you to make a decision that makes financial sense for you.