At the moment the 20% loan (40% in London) is available to buyers purchasing a new build property but in 2021 it is due to be limited to first-time buyers only and will be restricted by regional price caps.
It is understood the House Builders Federation has been in talks with the government to discuss retaining the scheme in its current form beyond 2021 to address some of the problems faced by buyers due to Covid-19.
Craig McKinlay, new business director at Kensington Mortgages, said: “A potential extension of the Help to Buy scheme makes complete sense at this time. Builder and consumer confidence could struggle post-lockdown and this will certainly boost both.
“Construction jobs are not just vital to the housing market, but our economy too, and maintaining these is crucial to keep it running and helping us recover. In our current world of uncertainty, any certainty is extremely welcome.”
More time to prepare
The Help to Buy scheme has already supported buyers to purchase more than 248,000 properties since its launch in April 2013.
The government provides a 20% loan towards the deposit – 40% in London – and the buyer must provide at least 5% of the deposit from their own savings.
In April 2021 the scheme was due to undergo the restrictions and in 2023 was to be axed altogether.
However, by extending the scheme experts believe it will provide more time to prepare for any changes to be made. What’s more, it will allow borrowers who have signed up to the scheme recently to continue with their purchase, which may have been delayed due to the lockdown.
Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA) said: “Many borrowers who might reasonably have expected to be able to complete their purchase before the end of 2020 may now find that very challenging.
“Any flexibility which will allow purchases to complete beyond the originally fixed deadlines will be welcomed.
“Going forward, it may be that some changes could sensibly be made to the scheme, while allowing it to remain in place for longer. Such changes could, for example, relate to the types of properties being built and could address some of the criticism which Help to Buy has attracted in the past.”
My partner and I have exchanged contracts in early February on a property which we are using the help to buy equity loan on that was originally due to complete in November. Due to COVID-19 the completion date has been pushed back to April. We are now in an incredibly difficult position and praying that the government extends the current scheme beyond April to tide us over.
We have recently paid a deposit on a new build due to complete Nov/Dec this year. This now now been changed to June/July next year which means we won’t be able to participate in the HTB scheme. We are deeply disappointed as it means we won’t be able to afford the new build now 🙁
We are looking at our first help to buy however I’m selling my shared ownership which means with the current help to buy being stopped in april this isn’t going to be achievable. I think extending it for another year is a fantastic idea and will help so many people and help the economy start up again.