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The UK is winding down its flagship scheme to encourage home ownership months earlier than planned, in an unexpected move that is likely to thwart thousands of buyers planning to use the equity loan.
Help to Buy will come to an end in March 2023, a decade after it was first introduced by then-chancellor George Osborne as a way of giving buyers a leg-up on to the housing ladder. But they will now have to reserve their properties by the end of October — months earlier than anticipated.
The new deadline was briefed to housebuilders by Homes England, the government’s arm’s-length housing body, on a call earlier this month.
Developers were told not to alert customers to the new cut-off, two people on the call told the Financial Times. Homes England said they should “await communications and marketing guidance from Homes England which would be available ‘by September’,” one of the people said.
Before the government’s intervention, buyers were anticipating that they could reserve a home, a process which usually involves identifying a plot and putting down a few hundred pounds as a holding deposit, up until the end of the year.
Homes England’s move curtails that by at least two months and is likely to mean “a few thousand” fewer homes are sold through the scheme, according to David O’Leary, policy director at the Home Builders Federation, an industry group.
“This new deadline defies logic,” he said. “Help to Buy has supported a third of a million households to buy their first home but a last few thousand potential homeowners are having the ladder pulled away with little warning. We want to work with Homes England and government to find a more sensible approach.”
Homes England said the change, which was first reported by the Telegraph newspaper, was being brought in to ensure buyers did not leave starting the process too late and risk a purchase — which must be completed by March 31 — collapsing.
“The deadline for new applications is at the end of October to ensure consumers have enough time to complete their purchase,” it said.
The agency denied that developers were told to remain silent about the change to the timetable. Housebuilders were informed of it “around May 17”, Homes England said, and the guidelines for applying to the scheme were updated on the government website on May 20 “to clearly state the deadline for new applications”.
Builders have relied heavily on the contentious scheme, which the government says has helped about 361,000 people buy a new-build home with a deposit of as little as 5 per cent of the property’s total value, with the government providing a further 20 per cent equity loan, or up to 40 per cent in London.
Loans totalling more than £22bn have been disbursed since 2013, supporting the purchase of more than 350,000 properties, the majority bought by first-time buyers.
But as well as boosting access to housing, the scheme has been criticised for pumping up the share prices of leading builders. A House of Lords report earlier this year said the scheme had failed “to provide value for money”.
The “scheme, which will have cost around £29bn in cash terms by 2023, inflates prices by more than its subsidy value in areas where it is needed the most . . . This funding would be better spent on increasing housing supply,” the report said.
The Department for Levelling Up, Housing and Communities said Help to Buy “is just one of the ways the government has made home ownership more achievable and affordable”. “Shared Ownership, First Homes and the mortgage guarantee scheme continue to support many more people into homes of their own,” it added.
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