Help to Buy extended as part of government’s plan to get back to business

Posted on September 1, 2020

Since its launch in 2013, the Help to Buy equity loan scheme has helped a number of people get on and climb up the property ladder.

The Covid-19, or coronavirus, pandemic and subsequent lockdown however saw a number of house transactions stopped in their tracks. But as many industries begin to embrace a new normal post lockdown, the government has given the new build market and the buyers waiting to move into their new homes a much needed lifeline…

What is the Help to Buy equity loan scheme?

Introduced seven years ago, the Help to Buy equity loan scheme is a government backed initiative that allows buyers of new build properties to purchase with just a 5% deposit.

Under the scheme, the government lends you a further 20% (40% if you intend to purchase a property in London) so you can arrange a mortgage with a 25% deposit. This support has allowed many buyers to benefit from even better mortgage products and interest rates, and ultimately purchase properties of higher values.

The loan is then paid back upon the sale of the property or homebuyers can begin to make repayments on the loan after the five-year interest free period comes to an end.

When will the current Help to Buy scheme end?

The government recently confirmed that the Help to Buy equity loan scheme will not end in December 2020. The new deadline for homes sold via the scheme is now 28^th February 2021. The scheme extension means that homebuyers who have reserved their new build properties by 30^th June 2020 will have more time to purchase their home.

The deadline for completion of sale has not been altered and property purchases will need to be legally finalised by 31^st March 2021.

Why was the scheme extended?

The extension was introduced in response to the delays being experienced throughout the sector due to Covid-19.

According to the Home Builders Federation, without the two-month extension approximately 18,400 sales of new build properties would have fallen through. The news has been welcomed by homebuyers and builders alike as a result.

What’s next for Help to Buy?

The Help to Buy equity loan scheme will be reformed next year with the new scheme set to be introduced on 1^st April 2021. Unlike the previous Help to Buy equity loan scheme – which was available to all buyers apart from those who own another home – the reformed scheme will only be available to first-time buyers.

How much you can spend on a new build property will also be capped depending on your region. First-time buyers looking to purchase a new build in the North East for instance will be capped at £186,100, whilst those in London can purchase a property with a value of up to £600,000 with Help to Buy support. The new scheme is set to run for two years.