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First-time buyers face losing homes in Help to Buy fiasco

Charlie Cook, 28, purchased a house with Help to Buy that has been hit with construction delays - Simon Turnbull for The Telegraph
Charlie Cook, 28, purchased a house with Help to Buy that has been hit with construction delays - Simon Turnbull for The Telegraph

Charlie Cook has spent years living with his mum and dad in Hornchurch, Essex, to save up for his first home. Earlier this year he finally scrimped enough together to afford a new-build flat in the area.

Mr Cook, 28, reserved a £411,000 home in early June with a 2.59pc mortgage rate. He planned to use the Government’s Help to Buy scheme to get a low-interest 40pc loan which would top up his 5pc deposit.

But there was a snag: the construction of the property was beset by delays, and he was told last week that it would not be finished in time for the Government’s deadline at the end of 2022, so he will not be able to use the Help to Buy scheme. As a result, his dream of owning his own home has crumbled.

Mr Cook and hundreds of other first-time buyers are now losing their only chance at getting on the property ladder, as the scheme has closed to new buyers. Many, particularly those with small deposits, are virtually locked out of the market as mortgage rates soar. Mr Cook and other first-time buyers are petitioning the Government for a deadline extension to save their purchases.

Help to Buy, which allowed first-time buyers to get a property with just a 5pc deposit, closed to new applications in October. Under the scheme the Government provided a loan of up to 20pc of the purchase price – 40pc in London – which was interest-free for five years.

Mr Cook’s developer, Bellway, blamed the construction delays on an inability to get materials such as bricks in time, as well as recent rainy weather.

Buyers using Help to Buy must complete new-build compliance checks before December 31 according to rules set by the Government – even though the scheme itself is not being wound up until March. These checks normally happen just days before a sale completes, meaning that many of those expecting to get help with a purchase pencilled in for next year will miss out.

“I’m quite devastated because if I can't use Help to Buy I can't buy this property – or probably any other property,” said Mr Cook. “I basically live in London: even though where I live is classed as Essex it’s a London borough, so the prices here are ridiculous. I'm buying on my own, so it has put me in a very tricky situation.”

Mr Cook, who works in the financial technology sector, hopes the Government will make the same decision it made in 2020, when it extended the completion deadline for an earlier iteration of the Help to Buy scheme because of construction delays during the pandemic.

If this does not happen, Bellway has said it will refund solicitors’ fees and the costs of customised add-ons, but not all developers are doing the same.

‘This will cost me £7,000’

Meghan Mosby, 36, from Northumberland, stands to lose £7,000 if delays to the completion of her home means it misses the deadline. She and her husband reserved their £180,000 house in March and secured a mortgage rate at 2.04pc – far below current rates of around 6pc on average. But the developer has told her it will probably not be ready until January, which is past the Government's deadline.

“It's absolutely soul destroying,” she said. “It's going to ruin lives. This scheme was put into place in the first place to help people who couldn't otherwise buy without it, and to help us get on the ladder. We've worked for years to save up this money."

Ms Mosby, who spoke using a pseudonym, does not blame the developers but the Government for setting an “unnecessary” cut-off date.

“My husband, my daughter and I were looking forward to moving in,” she said. “We've made plans and now we might lose everything. And now, with the way the mortgages have gone, we've spoken to brokers, we've looked at every other option possible to buy this property – and without Help to Buy we just can't do it.”

Josh Knapton, 28, reserved his £240,000 flat in Dartford, Kent, in March with a five-year fixed mortgage. But his developer, Bellway, said it would not be ready until February, meaning he will miss the deadline.

“I'm currently living with family,” said Mr Knapton, who spoke using a pseudonym. “At the age of 28 I’m obviously ready to leave but it’s now probably going to hold me back until my mid-30s at this rate. I'm disgusted by it. This has put my life on hold for another half a decade, all because there is this premature completion deadline.”

“I will not be able to move out now,” he added. “There’s no Help to Buy scheme, the interest rates have doubled and I’m not going to get the £48,000 loan.”

A spokesman for the Government said: “Help to Buy has supported over 369,000 households into homes of their own and will continue to help many more until the scheme ends in March 2023.”

A Bellway spokesman said: "At the time of reservation we sold the properties with a view to them being completed by the deadline. Unfortunately due to unprecedented delays across the industry due to material and labour supply shortages, this has had a knock on impact on completion dates.

“This is something that has impacted all of the industry, not just Bellway and regretfully this has impacted some customers looking to use Help to Buy to part finance their purchase."