The Government’s Help to Buy Scheme has helped many first-time buyers to get onto the property ladder. An equity loan reduced the amount needed for a deposit and mortgage, making it more affordable for new homeowners. One of the conditions of repaying the loan is the need to get a valuation report from a surveyor regulated by RICS. When is this required and why?

Repaying the Government Equity Loan on Help to Buy properties

The Help to Buy Scheme offered first-time buyers a 20% equity loan from the Government. This meant that buyers needed to find a 5% deposit and a 75% mortgage at the point of purchase. The equity loan simply required a £1 monthly fee for the first 5 years, but then interest payments are/were due.

The 20% loan can be repaid, in part or full, at any time within the equity loan term of 25 years. It also had to be repaid, along with any interest, if you decided to sell the property. The sooner it was paid off, the lower the interest payments. However, the amount owed is not fixed; it is based on the current value of the property, rather than the original purchase price.

An independent valuation ensures that you have a fair current property value.

Note: The government has recently announced that the Help to Buy Equity Loan scheme will close on 31 March 2023 and it closed to new applications on 31 October 2022. To be eligible for an equity loan, you must legally complete by 31 March 2023. Read the full notice on the Gov.uk website.

When do I need a Help to Buy Valuation?

Help to Buy valuations are required if you choose to repay the loan in full, partially repay the loan to reduce the Government’s share (known as Staircasing) or sell the property. At these points, a Valuation Report has to be presented to show the current property value.

Why do I need a RICS Valuer?

The Royal Institution of Chartered Surveyors (RICS) is the respected authority on building surveys and valuations. RICS Registered Valuers follow prescribed guidelines when inspecting the internal and external features, size, condition, age and location of your property.

To ensure that the Help to Buy valuation is fair, the RICS Registered Valuer also has to give examples of three similar properties, within a 2-mile radius, that have been sold within the last 3 months. This information is collated into a report.

You may already have a valuation from an estate agent or mortgage lender; however, this is not accepted by Target HCA for their loan redemption purposes. Therefore, you still need to get a valuation report, from an independent RICS Registered Valuer.

How Long is a RICS Valuation Report Valid For?

As the property market is turbulent and house prices regularly change, a RICS Valuation Report is only regarded by Target HCA as valid for 3 months. After this time, there is a 2-week window to request a ‘desktop valuation’. This involves online checks to see if anything has altered in the market, so the Surveyor does not undertake a re-visit for this. Target HCA also regard the desktop valuation as valid for 3-months.

Whilst 3 months is sufficient time to arrange partial or full repayment of the equity loan, it can be short when selling a property. Therefore, it is advised that you find a local Help to Buy surveyor when you are ready to sell. Then, request the valuation at the point of receiving an offer on your house. This offers the maximum 6-month period (including desktop valuation) to complete the sale.

Only one follow up desktop valuation is usually permitted, so a new survey and valuation report is required if the first expires.

Local Help to Buy Valuer

As the RICS Registered Valuer needs to come to inspect your property, it is easier for all involved if you instruct a local one. This should speed up the process and you are likely to benefit from their knowledge of the local property market.

Neil Moran Associates Ltd is regulated by the RICS and based in the heart of the Home Counties. We aim to make the process as painless as possible and provide a thorough and fair valuation service. If you are redeeming your loan for re-mortgaging or sale of a Help to Buy property purposes, contact us for availability, prices and advice on 01296 254800 or email info@neilmoranassociates.com.