Assistance to Buy extended to avoid a large number of house purchases falling through
The government has extended the Help to purchase equity loans scheme, which comes like a huge relief to buyers whose property purchases were set to fall through.
Thousands of first-time buyers and residential movers in England had their plans cast into doubt after building delays brought on by COVID-19 meant their houses were unlikely to become performed by the scheme’s previous building deadline of 31 December.
Now, though, the federal government has extended the cut-off by two months, giving builders until 28 February to complete construction.
Here, Which? offers advice on exactly what the extension method for house buyers and explain how Assistance to Buy is set to alter from April 2021.
Help to purchase build deadline extended
Before the government’s announcement last Friday, the guidelines of the current Help to Buy equity loan scheme in England stated that construction needed to have completed on properties by 31 December this season – a period that became impossible for many developers after coronavirus struck the nation.
The government has now extended the deadline to 28 February 2021, giving builders an extra 8 weeks to accomplish properties. The final date for purchases to be completed will stay at 31 March 2021.
The government says further help will be offered on the case-by-case basis to purchasers who face ‘severe’ build delays, potentially extending the conclusion deadline to 31 May.
How is Help to Buy changing?
These deadlines are essential because the English Help to Buy scheme will change significantly from April 2021.
The current scheme has been utilized by a lot more than 270,000 buyers, but it has faced allegations of pumping up the worth of new-build homes and lining the pockets of developers.
This has led the government to reform Help to Buy. From next April, the scheme is going to be restricted to first-time buyers and have regional price caps, which will range from lb186,100 within the North East to lb600,000 working in london.
This means developers will have to ensure any homes they build adhere to the new thresholds, or cease selling properties with the scheme.
The government says it's no intends to delay or scrap these reforms due to COVID-19.
Which? investigates Help to Buy losses
In June, Which? published a comprehensive investigation into the price of homes sold under Help to Buy.
After a complaint to the Information Commissioner, we obtained never-seen-before data showing that one in seven Help to Buy homes was resold at a loss throughout the scheme’s first six years. This amounted to more than 5,000 properties.
We learned that Assistance to Buy resales had made overall losses in 26 areas of England, despite average house prices increasing in each and every one of those areas.
This raised serious questions about the premium prices developers have charged for properties built underneath the scheme.
Buying your first home during COVID-19
The Assistance to Buy equity loan scheme continues to be extremely popular, especially with first-time buyers, who account for around 80% of purchases.
The scheme is of interest because it enables you to purchase a new-build home with just a 5% deposit along with a 20% loan in the government.
However, it does possess some pitfalls and it’s not the best choice for everyone.
If you’re thinking of buying your first home later this season, you might find you've fewer options because of the coronavirus outbreak.
Buyers having a 5% or 10% deposit have experienced their choice of mortgages dry up. Which means you may need a first deposit of 15% to obtain to the property ladder.
If you simply have a small deposit, you might be best waiting until the market fully recovers and more deals become available.
First-time buyers in more expensive areas can benefit from the temporary stamp duty holiday. If you’re buying your first home working in london, our calculations show you’ll save around lb6,300 in tax on an average-priced home.
Which? Money Podcast: what next for that property market?
In this week’s Which? Money Podcast, we discuss the state of play for individuals buying and selling homes.
We discuss the effect of the stamp duty cut, what’s happening to the mortgage market and just how buyer priorities are changing with insight from experts from Hamptons and Zoopla.
You can listen to the entire episode below and discover how to subscribe here.
