On October 8, the Government launched the second part of Help to Buy (HTB), the equity loan scheme designed to assist first time and low deposit buyers to purchase a home with only a five per cent deposit.

Phase 1 (HTB1) was launched in April. This was purely for new homes. The buyer borrows up to 20 per cent of the purchase price of a property on equity loans which are interest free for the first five years, interest payable thereafter with the loans lasting for 25 years, the life of the mortgage, until repaid or on sale.

From a property lawyer’s perspective HTB1 is a fairly complex procedure. Lawyers need to be involved with equity charges, where criteria have to be followed at different stages of the process and agents for the equity charge provider have to authorise each stage.

Phase 2 (HTB2) has now been launched, slightly ahead of the scheduled date of January 2014, in an attempt to stimulate the housing market further. It is hoped it will attract not only first time buyers, but also existing home owners purchasing any property valued up to £600,000.

Buyers provide a five per cent deposit and the 95 per cent mortgage provided by the mortgage companies is guaranteed by the Government.

The mortgage companies will purchase a form of insurance policy, though in reality the cost is passed to the buyer, probably through interest rates.

Some mortgage companies already offer 95 per cent mortgages with lower interest rates. It may be that HTB2 will increase competition from mortgage lenders.

It appears that HTB2 will be front ended and by the time the papers reach a lawyer’s desk it will proceed in the same manner as a normal purchase transaction, meaning there should no additional legal costs.

But what happens when the buyer wishes to sell? With HTB1 the equity loan agent is involved in settlement figures after they have valued the property. The lawyer has additional work as part of the conveyancing process. Under HTB2, the lawyer seemingly follows the normal process. If you are planning to purchase a home under either of the HTB schemes, then it is advisable that you contact a residential conveyancing expert. Birmingham Law Society can assist in finding a conveyancer to assist with making buyers and sellers aware of key points and important clauses of HTB.