Property & Mortgages

Help to Buy scheme may be extended to support buyers after lockdown


At present, the loan 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

The UK government is considering extending the Help to Buy scheme which will enable more people to take advantage of an equity loan to support them onto the property ladder.

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, he said.

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, Davies said.

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, she said.

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