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Plans to save hundreds of stranded first-time buyers

first time buyers help to buy
first time buyers help to buy

Hundreds of first-time buyers could be thrown a lifeline amid Government plans to extend the Help to Buy completion deadline.

The Home Builders Federation, a trade body, told its members on Wednesday that an extension to the scheme is expected this week – potentially stopping sales to first-time buyers from collapsing and them losing thousands of pounds.

In a letter to members, seen by The Telegraph, the trade body said: “As of our most recent conversations with officials this morning, we now expect to receive some confirmation of an extension to the deadline, hopefully this week.”

The housing department will intervene after the building industry has made repeated requests to grant an extension to the Dec 31 deadline.

The Government said it would not comment on speculation, but did not deny that it was planning to extend the deadline.

Hundreds of first home sales faced collapse after delays to builds meant properties would not be registered in time to qualify for the Help to Buy scheme, even though the buyers were reliant on Government support.

Those using equity loans should not cancel existing reservations yet, even if they have been warned that the construction schedules will overrun the Dec 31 practical completion deadline.

Under the current iteration of Help to Buy, first-time buyers can purchase a new build home with a 5pc deposit and a 20pc Government-backed equity loan (40pc in London). Registrations for new applicants to the scheme closed on Oct 31, but the construction of their homes must be finished by Dec 31 or they cannot be purchased using the loans.

Supply chain issues and labour shortages have meant build schedules have been plagued with delays. Hundreds of buyers have been warned that their homes will not be completed in time. They stand to lose tens of thousands of pounds in loans, which are interest-free for the first five years, and in many cases are their only chance of getting onto the housing ladder.

Even if buyers could boost their deposits, they would be priced out by mortgage rates, which have soared since many of them first secured their deals.

The current practical completion deadline is three months before the legal completion deadline on March 31 2023. These dates must have some gap between them, but the Government could extend the practical completion deadline by two months. The legal completion date on March 31 is “unmovable”, HBF told members.

Customers who already cancelled their reservations will be unable to return to their deals, even if their homes could be completed by the new deadline, the letter stated. There would also be no opportunity for new registrations.

There is no comparable replacement for the scheme, which has helped more than 369,000 people purchase new build homes since it launched in 2013.