The Help to Buy scheme, which was introduced by the UK government to help first time buyers in England get a foot on the property ladder, will close to new applicants on 31 October, which is two months earlier than the expected date. The scheme was set up in 2013 to level up access to the housing market, and it is due to close fully on 31 March 2023.
The scheme allows first time buyers to move into a new-build home with a 5% deposit. The government will provide an equity loan for up to 20% of the value of the property, or 40% in London. Furthermore, the loan will be interest free for the first five years, allowing buyers to take out a mortgage for 75% of the purchase price, or 55% if in London.
Last April, regional price caps were introduced amid criticism that the scheme was inflating house prices. It was also open to existing homeowners who wanted to purchase a new property up to the value of £600,000, and this led to fears that it was failing to help those who needed it the most.
Efforts have been to level up access to the scheme, and take into account the regional house price differences more comprehensively, based on the average price in each area. There is now a maximum price of £186,100 in the North East, £224,400 in the North West, £255,600 in the West Midlands, £437,600 in the South East, and £600,000 in London.
If you are interested in purchasing a property through the Help to Buy scheme, most of the major property portals, such as Rightmove and Zoopla, will allow you to search for new-build properties, which often offer a certain proportion of homes under the scheme. There are also dedicated regional Help to Buy agents.
With the new deadline for applications moved to 31 October, it is advisable to begin looking as soon as possible. Homes England, who are the body responsible for the scheme’s administration, commented that the deadline had been moved to ensure that applicants would have enough time to exchange contracts by the 31 March deadline.
A spokesperson for Homes England said: “Homebuilders were informed about the deadline for new applications around the 17 May. The guidelines for applying for the Help to Buy: Equity Loan on gov.uk were then updated on 20 May to clearly state the deadline for new applications. Help to Buy agents also updated their websites week commencing 16 May.”
“When the scheme closes on the 31 March 2023 homebuyers must have legally completed on their home. The deadline for new applications is at the end of October to ensure consumers have enough time to complete their purchase including finalising conveyancing etc.”
However, even if you miss out, the government is likely to put a successor in place, such as the First Homes scheme. Some lenders remain willing to offer low deposit mortgages of 5% or 10%, with a fixed two- or five-year interest rate of below 3%. There are also shared ownership schemes available in more expensive areas.
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