The Government’s current Help-to-Buy Scheme in England is planned to close in March 2021. There will be a new scheme launched a day later, but this will only be open to first-time buyers and not all people looking to buy a new property.
With a 5% deposit and a 75% mortgage, first-time buyers may be able to borrow up to 20% of the cost of a new home from the government, or as much as 40% in London. The amounts to spend will vary from region to region, as new regional price caps are being put in place. These price caps are changing the way the scheme works significantly and while in the North East it used to be £600,000, from April 2021 it will be £186,100. This may see many potential and existing homeowners hoping to work quickly to complete their sale before 31st March.
Could COVID-19 Impact the Changes?
As the building sector in the UK has been hit hard by the Coronavirus pandemic, many in the industry have called for an extension of the original Help to Buy scheme to allow them to catch up with delays. They want new home purchases on their developments to be open to a wider range of potential homeowners than will be possible after the change in in the scheme.
The proposal to extend the current scheme by three months is supported by both homebuilders and the Housing Minister, Robert Jenrick. Chancellor of the Exchequer Rishi Sunak is said to be considering the changes before making a final decision.
Supporters of the idea say that it will ensure that as many as 18,000 buyers don’t lose their chance to buy the subsidised home they had planned before COVID-19 hit. The House Builders Foundation believe that as many as 40% of the 18,000 buyers who would be utilising the Help to Buy Scheme currently in place would be ineligible after the change, and this seems an unfair move when the whole industry had been on standstill due to the pandemic.
Who has Help-to-Buy Helped?
The Housing Ministry claim that since the launch of Help to Buy seven years it has allowed for 272,000 households to buy a new-build home. Many of these homeowners may not have been able to do so without and it has been heralded as a successful scheme by both politicians and industry professionals. The last great recession saw mortgage lenders and banks become less comfortable in lending the amounts needed to buy a property, which is why the government stepped in.
Like all government schemes, it has had its critics. They mainly centre around the scheme driving up house prices and boosting the profits for housebuilders but there are also many homeowners who believe it would have taken much longer to move into their perfect home without the support.
Whether the changes are postponed or come into force in April, this is a significant change in a familiar scheme which many homeowners may have been planning to use, so it’s worth checking your eligibility once more.