Help To Buy extended to 2023

The government’s Help To Buy scheme has been extended for two more years by Chancellor Philip Hammond in his Budget speech.

The equity loan scheme was due to end in 2021, but Mr Hammond announced it will be extended to March 2023, but only for first-time buyers on new build properties.

Interest free

Launched in 2013, Help To Buy offers interest free loans of up to 20% to help wannabe homeowners to get their first foot on the housing ladder and boost the UK’s ailing housebuilding industry.

The government expects to have lent £22 billion to around 360,000 homeowners by April 2021.

Clarify

Earlier this month the Intermediary Mortgage Lenders Association (IMLA) had called on the government to clarify the future of the scheme to prevent a ‘destabilisation’ of the housing market.

IMLA executive director Kate Davies said at the time: “Lenders and borrowers place heavy reliance on the scheme, and a major step-change to arrangements would risk significant market disruption and potentially undermine the government’s ambitious targets for new housing supply.”

Concerns

The Association of Mortgaged Intermediaries (AMI) had also expressed concerns, saying mortgage approvals and purchases were likely to “stumble” if the government did not extend its Help to Buy scheme past 2021.

It added that, without the scheme, new build loan-to-values were likely to fall back again and a drop in purchases and approvals would put more pressure on the re-mortgage market to support lending.

Price cap

Under the current scheme, loans are available for five years on houses valued at up to £600,000, but the new extension will see the national cap replaced by a series of regional values, based on 1.5 times the predicted averaged house price for a first-time buyer.

Help to Buy chart

No further extensions of the scheme are planned.

Top estate agent Mike Scott said: “Some 81 per cent of buyers under the current Help to Buy scheme are first-time buyers, according to the new review published today by the Treasury, so restricting the scheme to first-time buyers won’t have a large impact.”

The announcement was welcomed by Kevin Roberts, director of Legal & General Mortgage Club, who said: “Today’s extension of Help to Buy to 2023 has provided much-needed clarity over the scheme.

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“Not only do housebuilders now have more certainty for longer-term planning and building the thousands of new homes our country so desperately needs, but it also gives potential buyers who are saving for a deposit the peace of mind that they too can benefit from the scheme over the coming years.”