A sigh of relief from first-time buyers and developers across the country
By Megan Sawh
The last few months have been interesting (to say the least) for the UK property market, with several new trends emerging at speed - some fleeting, but others likely to stick. One conversation dominating the news agenda has been the upcoming completion of the popular government-backed Help to Buy scheme.
The latest government statistics reveal 369,104 properties were bought with a Help to Buy equity loan in the period 1st April 2022 – when the scheme launched – to 30th June 2022. Acting as a means to help first-time buyers step onto the property ladder, the loan provides up to 20% (40% in London) of a property’s value.
The scheme closed to new registrations in October 2022, with all transactions needing to be legally completed by 31st December 2022. After widespread warnings that many developers would miss this deadline – due to higher interest rates on development loans, labour shortages, inflated costs on building materials and motorway protests and rail strikes preventing deliveries and workers from getting on site - the deadline was further extended to 31st January.
However, over the last few weeks, developers and hundreds of first-time buyers have been lobbying the government to extend it further and on 26th January, the Department for Levelling Up, Housing and Communities confirmed a Help to Buy extension. Under the extended – and final - deadline, developers now have until 31st March 2023 to get homes under the scheme ready.
While no new or additional reservations can be submitted, the Help to Buy extension will help hundreds of buyers who were faced with the prospect of losing their new home. For developers who are unlikely to resolve the delays and meet the deadline, they must refund customers’ reservation fees and deposits.
Faced with rising interest rates, the cost-of-living crisis and fears of a recession, buyers are becoming more cautious and there is no doubt this extension will be gratefully received amongst first-time buyers and developers – and as a result, hopefully provide a positive boost to the UK housing market. Although we’re not convinced it’s all good… what is going to happen once the scheme finally finishes? How else are first time buyers going to be supported?
With the decade-long scheme coming to an end in the coming weeks, Homes England has announced there are no plans to extend or replace it. First time buyers, watch this space…