The Help To Buy scheme in England has been extended by two months until May 31 2021, with the coronavirus pandemic estimated to have delayed construction of some new homes by as much as eight months. The extension only applies where an application is already in progress.
It had been reported that more than 16,000 sales could fall through had calls for an extension been refused. This is the third occasion on which the deadline has been extended, but the current position is that no further extensions will be granted, despite some commentators feeling that the extension is not sufficient.
A new, less generous, Help To Buy scheme comes into force on April 1. Unlike the existing arrangement, this scheme is for first time buyers only. It is scheduled to end on March 31 2023. It will still involve the Government offering a loan for 20% of the purchase price, with the homebuyer required to find 5% of the value themselves. There will be no interest payable on the Government loan for the first five years. The maximum loan will be 1.5 times the average first-time buyer purchase price in the appropriate region of the country.
Over the last seven years, 278,000 people have used Help To Buy to assist the purchase of a property, although a 2019 report by the National Audit Office suggested that many people who used the scheme would actually have been able to afford a property without any Government help.
A Homes England spokesperson said:
“This measure provides certainty to developers to build out homes delayed and further protects customers whose purchases have been delayed by Covid-19.”
A Ministry of Housing, Communities & Local Government spokesperson said:
“While construction can continue during the national lockdown, we recognise there have been delays caused by the pandemic and we understand the difficulties this has caused some people using the Help to Buy scheme.
“That’s why Homes England is giving builders more time by not enforcing the 28 February build deadline – so only requiring sales to be completed by 31 March, or 31 May 2021 for reservations made before 30 June 2020.
“We are continuing to monitor the situation.”
Andrew Montlake, managing director at Coreco mortgage brokers, said:
“While Homes England have told developers there will be no more extensions, this should give builders some much needed breathing space to fully complete the property and ensure that their buyers do not miss out.
“It will be interesting to see whether or not this extension sets the scene for something similar to happen with the stamp duty holiday.”
The stamp duty holiday to which Mr Montlake refers is currently scheduled to end on March 31. Currently, no stamp duty is paid on the first £500,000 of a property’s value. From April 1, we are set to revert to the standard system, whereby only the first £125,000 is free from duty (or the first £300,000 if the purchaser is a first-time buyer).