The Government has announced a small extension to the Help to Buy equity loan scheme to allow for delays caused by coronavirus – but the change falls short of housebuilders’ hopes.
The building deadline for new homes sold through the scheme will be extended by two months, from the end of December 2020 to February 28 2021. But the March 31 2021 deadline for most sale completions remains the same.
Where necessary, extensions may be granted for homebuyers who have experienced severe delays because of the pandemic and reserved properties before June 30. These buyers will get an extension to complete their purchases by May 31 2021.
The changes are relatively minimal; originally, developers had hoped the scheme would be extended by a full year.
Housebuilders had called for an extension to the current scheme to allow for building and sales delays caused by lockdown, which halted construction on almost all major developments for more than six weeks, and the housing market shutdown.
The Home Builders Federation, a trade body, estimated that 18,000 homes would be built too late for the previous deadline. More than 7,000 of these would not have been likely to be eligible for the new version of the scheme, which starts in April and will introduce regional price caps for homes.
The current scheme means buyers can purchase new-build homes up to the value of £600,000 with just a 5pc deposit, aided by a 20pc government equity loan (40pc in London). Since it was introduced in April 2013, it has been used to complete 272,852 sales.
Christopher Pincher, the housing minister, said the announcement will help to provide certainty for Help to Buy customers.
But some worry it will not be enough to help struggling housebuilders.
Alex Rose, of property website Zoopla, said: “The devil is in the detail, and many would argue that a two-month extension might not give housebuilders enough time to meet these build deadlines.”
He added: “Residential construction is currently operating at between 60pc and 85pc of normal output. Many developers are behind with their build schedules.
“While we'd hoped for a more encompassing extension, every ounce of support helps at this stage.”
Demand has increased for the Help to Buy scheme in the wake of coronavirus, as banks withdrew low deposit mortgages en masse when the pandemic hit. Although some lenders such as Nationwide are now offering mortgages for buyers with 10pc deposits, 5pc deposit mortgages are still almost nowhere to be seen.
For many without significant savings, Help to Buy is the one of the few ways to get on the property ladder.
Buyers are also keen to take advantage of Chancellor Rishi Sunak’s stamp duty holiday, which raised the nil-rate band on homes from £125,000 to £500,000 until March 31 2021.
In the week after the holiday was announced, Help to Buy searches on Zoopla were 60pc up on the level just before the market reopened.