The Help to Buy scheme was a scheme introduced by the UK government in 2013 as a means of boosting the new build property market and to give more people the chance to purchase their dream home. The scheme ran successfully from 2013 until the end of this year when it was officially ended. Although new applications ended in October, buyers currently have until March 2023 to formally complete their purchase. Builders also previously had until December 31st, 2022, to complete building the properties. However, after concerns raised by developers and buyers, Homes England, the body that funded the scheme, have announced that the 31st of December completion Help to Buy deadline will be extended by a month.
What Was The Help To Buy Scheme?
The Help to Buy scheme was a scheme that aimed to help people purchase property that they might otherwise have been priced out of or have struggled to purchase for one reason or another. The scheme provided buyers with a 20% (or 40% inside of London) interest free equity loan towards purchasing a new build property, essentially increasing the buyers deposit by 20 or 40%.
In order to use the scheme, the borrower had to put down a minimum of 5% deposit themselves and meet the standard mortgage affordability criteria. In the beginning, both first-time buyers and home movers could make use of the scheme and the purchase price of the property was capped at £600K. In recent years, this was changed to only being available for first-time buyers and the maximum purchase price was reduced as the scheme wound down.
The End Of Help To Buy And Deadlines
It was announced that 2022 would be the final year that Help to Buy would be running and a deadline of October 2022 for new applications being submitted was set. Another deadline of the 31st of December 2022 was set for developers to finish building Help to Buy properties and a final deadline of the 31st of March 2023 was set for all Help to Buy purchases to complete. Some builders were reporting that they were having to consider cancelling reservations that had been made months ago because of a fear of not being able to complete the build in time.
But, after a lot of concerns around build completion being raised by buyers and developers, Homes England have announced that they would be willing to extend this deadline from the 31st of December 2022 to the 31st of January 2023 to give builders more time to finish properties. The extension should in theory give homebuyers enough time for their homes to be built and a new-home warranty to get issued before the end of March 2023.
Currently there are no plans to extend the March 31st Help to Buy completion deadline however, with lender and solicitor backlogs causing huge delays in many applications, we could very well see Homes England extending this deadline too. Only time will tell.
What Happens After Help To Buy?
The UK government is yet to announce any firm plans for the post HTB era or any new schemes that could replace it. We as mortgage advisors do however predict that there will probably be a lot more focus on things like shared ownership in the future, especially in London and the South.
The shared ownership scheme has been around for a few years now and there are no signs that it is going to stop any time soon. Similar to Help to Buy, the shared ownership scheme will actually allow people to purchase a share of a property rather than the entire property. They will then eventually be able to buy more and more shares until they eventually own 100%, this is called staircasing.
The person purchasing a shared ownership home will secure a mortgage on their share and pay rent on the share that they do not own. This scheme really helps people who couldn’t ordinarily afford to purchase, especially those in London where a one-bedroom flat could set you back £500K. In the new-build market specifically, more and more builders are offering purpose built shared ownership properties and we could easily see this being a key focus of the next few years.
Where Should A First-Time Buyer Start Their Journey?
If you are a first-time buyer looking to purchase your first home, the absolute best place to start is with a mortgage advisor. Give us a call at Oportfolio and speak to one of our friendly and helpful advisors. They will be able to tell you exactly how much mortgage you can afford, what schemes might be available to you, and what purchase price you should be looking for. Our initial mortgage affordability check and consultation are completely free of charge. So why not give us a call?