The government announced it has shifted the deadline by which builders must finish building homes to comply with the scheme which allows buyers to take out a government loan for 20% of the value of a new build property.
Previously, new homes would have had to be completed by the end of December to be eligible for the scheme but the extension means the deadline will move to 28 February 2021.
What’s more, as an additional measure, Homes England – a public body which funds affordable housing – will help people who have had a reservation in place before 30 June to assess their situation and may look to provide an extension, the government said.
Homebuyers in this situation will have until 31 May 2021 to legally complete. Under normal circumstances, legal completion would take place on 31 March 2021.
The government said these changes would help thousands of customers – who have faced uncertainty about whether they would be able to complete their purchase because of delays caused by coronavirus – get their key to their homes.
The scheme, in its current form, is due to end on 31 March 2021, when it will only become available to first-time buyers and will be subject to regional price caps. It will close completely in 2023.
The extension will help those people who are not eligible when 31 March 2021 arrives and who have had their purchase held up due to the pandemic.
‘Great news’
Craig McKinlay, new business director of Kensington Mortgages, said the extension was great news for both first-time buyers and developers.
“Not only will it boost market confidence further and allow housebuilders to plan more long-term,” he said, “but allow buyers who’ve had completion dates pushed back a chance not to miss out. Of those that use the scheme, eight in 10 are first-time buyers, so it makes complete sense to extend.
“For many, the scheme is a lifeline to stepping onto the property ladder. And especially now more than ever when it is really hard for people to build deposits. Lenders are only gradually returning to the high LTV market again – so it effectively makes up the loan difference and bridges the gap between lenders and buyers.”
Developers’ schedules
But there were concerns two months was not long enough. Alex Rose, director of new homes at Zoopla, said: “The devil is in the detail, and many would argue that a two month extension might not give housebuilders enough time to meet these build deadlines.
“Residential construction is currently operating at between 60% and 85% of normal output after coronavirus halted work for upwards of six weeks across UK building sites. As a result, many developers are behind with their build schedules.”
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