What impact will the closure of Help to Buy have on housing supply?

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The Government’s Help To Buy Scheme closed to new applications at 6pm on Monday 31 October, signalling the end of nearly a decade and £23Bn worth of support to help first time buyers to purchase their own home. The scheme allowed people to borrow up to 20% of the value of their chosen new build home, interest free for the first five years, topping up the value of their (minimum 5%) deposit or reducing the size of the mortgage that they needed to purchase their property.

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The scheme has been hailed as a great success, with nearly 50% of new build sales in 2020 being accounted for by first time buyers using the scheme. This figure dropped in 2022 to about 20%, which is still significant, noting the impact of the current economic crisis on buyer confidence across all industries.

What Happens Now?

Housebuilders who are facing significant uncertainty due to the fragile economic climate are considering lobbying the Government to extend or replace the scheme in order to prevent a reduction in house building starts in 2023 and beyond.

However, the Government has been very clear that the scheme will not be extended and that in order to benefit from it, the deadlines set at the outset must be met. These include all homes booked under the scheme to be built by 31 December 2022 and completion finished by 31 March 2023.

These challenging deadlines will be at the forefront of many conveyancers’ minds as they attempt to ensure that as many house sales as possible complete in time, ensuring that all legal paperwork associated with the help to buy equity loan repayment is fully understood by their clients and agreed by lenders.

Alternatives To Help To Buy

The Government are continuing to offer four other schemes to make buying a home more affordable and now that the first Help To Buy deadline has passed, many conveyancers such as Sam Conveyancing are expecting prospective clients to begin asking for support in buying a property by using them. These schemes are:

– The Mortgage Guarantee Scheme which was introduced on 19 Apr 21 to increase the range of 95% mortgages available.

– Shared Ownership which allows people to buy a share of a new build home, paying rent on the remainder.

– First Homes, which allows first time buyers and key workers to buy homes at a discount of up to 30% of the purchase price.

– Right To Buy, which supports eligible council tenants in England to buy their rented home.

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The Future

It is clear that the current rates of inflation, coupled with soaring energy bills will have a significant impact on the appetite of first time buyers, with many remaining cautious as to whether this is the right time to buy a home. However, despite the challenging political and economic environment, there is still support available for those that wish to take the leap. Conveyancers stand ready to support their clients, advising on all possible routes to purchase and supporting them in achieving their dream of owning their own home. Housebuilders’ concerns about reduced project starts are valid, but by advising customers of the other government help available, a complete drop-off is unlikely.

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