The government has confirmed it is extending the completion deadline for new homes to help homebuyers whose property purchases have been delayed due to coronavirus.
The Help to Buy scheme was set up to help those with small deposits get onto the property ladder and has helped more than 270,000 homebuyers since its launch. It enables buyers to put down a 5% deposit, with the government providing a 20% equity loan (40% if you’re buying in London) which is interest-free for the first five years. Buyers take out a mortgage for the remaining 75% (60% if buying in the capital). The scheme is only available for new build properties costing up to £600,000.
Originally, the scheme required the new homes to have been built by the end of December this year. The extension means that the deadline will now move to 28th February 2021 to help where there may have been delays. However, the cut-off date for legal completion remains on 31st March 2021.
The Government has also confirmed that they will work with those who reserved a property before 30th June 2020 but have suffered severe delays due to coronavirus. If necessary they can look to provide an extension for legal completion of 31st May 2021.
The impact of coronavirus
The coronavirus pandemic has held up many property sales, with lockdown measures preventing builders from continuing with construction. It also prevented home buyers from viewing properties and delaying physical valuations.
Although construction has now started again, and valuations and viewings can also be conducted, many completion dates may now be later than previously expected, meaning thousands will now miss the deadline for the current scheme. According to industry body the Home Builders Federation (HBF), around 18,000 Help to Buy transactions could have been affected by the current December end date.
The current Help to Buy scheme will be replaced by a new scheme in April which will only be available to first-time buyers and will impose regional price caps on eligible properties. The HBF says that nearly half of buyers, around 7,200 people, hoping to buy through the current scheme wouldn’t qualify for the new scheme because they are moving up the property ladder rather than buying for the first time.
Find out more about how Help to Buy mortgages work in our Help to Buy Guide.