The government has extended the deadline for the Help to Buy initiative by two months.
Under the current scheme, which enables people to buy a new-build home, builders need to have finished construction by the end of December in order for buyers to qualify for the equity loan.
This deadline has now been extended until 28 February 2021, with the deadline for legal completion remaining unchanged at 31 March 2021.
The Help to Buy equity loan scheme enables people to purchase a new-build home with just a 5% deposit, with the government topping this up with a 20% loan that is interest-free for five years.
Housing minister Christopher Pincher said: “Today’s announcement will help provide certainty and assurance for Help to Buy customers whose new homes have been delayed due to coronavirus.”
Why is this happening?
The current version of the Help to Buy equity loan is due to be replaced by a new version of the scheme on 1 April 2021.
The changes, which include limiting it to first-time buyers, have been flagged up well in advance.
But thousands of families who had planned to use the scheme are understood to be at risk of not qualifying, as the home they were planning to buy may not be built in time due to the coronavirus pandemic.
The extension of the deadline should enable them to still use the scheme.
Who does it affect?
The Help to Buy equity loan scheme has helped 272,852 people buy their first home or trade up the property ladder since it was first launched in April 2013.
It has, however, been criticised for helping people on high incomes buy expensive homes.
The new version of the scheme will address these criticisms, limiting the initiative to first-time buyers only and imposing property price caps on the maximum value of homes that can be purchased through the scheme in different regions.
What’s the background?
The Help to Buy equity loan scheme is one of a number of initiatives to help people get onto the property ladder.
Other schemes include the Lifetime ISA, under which the government contributes up to £1,000 a year to savers aged under 40 who set aside £4,000 annually towards the purchase of a new home or retirement.
The First Homes scheme enables first-time buyers and key workers in England to buy a new-build home at a 30% discount.
First-time buyers have also benefited from a stamp duty exemption on homes costing up to £300,000, although the Chancellor recently announced a stamp duty holiday for all buyers on homes costing up to £500,000 until 31 March 2021.
Top three takeaways
- The government has extended the deadline for the Help to Buy initiative by two months
- Under the current scheme, homes would need to have finished being built by the end of December in order for buyers to qualify for the equity loan
- This deadline has now been extended until 28 February 2021, with the deadline for legal completion remaining unchanged at 31 March 2021
Source: Zoopla