Housing received several mentions in the Budget this year, but the industry has widely branded this year’s event to be one that addressed only some of the concerns of first-time buyers, and one that ignored the complexities facing landlords and older generations.
A key highlight of housing policy measures announced in Chancellor of the Exchequer Philip Hammond’s address was the widely anticipated extension of the Help to Buy equity loan scheme from 2021 to 2023.
The Help to Buy equity loan scheme was launched in 2013 and is open to first-time buyers, as well as those looking to move, but is restricted to new build properties.
From April 2021, the new scheme will be available for first-time buyers only, and there will be a price cap for properties eligible for the Help to Buy equity loan scheme from April 2021 to March 2023. In London, for example, Help to Buy will be capped at properties valued at £600,000 but in the North West a cap of £224,400 will apply.
In the Budget documents, it confirms: "The government does not intend to introduce a further Help to Buy Equity Loan scheme after March 2023."
Kevin Roberts, director of Legal & General Mortgage Club welcomes the move.
“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 [extension of the scheme] 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.”
But Craig McKinlay, new business director of Kensington Mortgages, says while the scheme has been helpful in assisting thousands of first-time buyers, “it isn’t the only solution to the housing crisis”.
With a Help to Buy Equity Loan the Government lends borrowers up to 20 per cent of the cost of a newly-built home, or up to 40 per cent in London, so the individual only needs a 5 per cent deposit, and a 75 per cent mortgage to make up the rest.
Gemma Harle, managing director of Intrinsic mortgage network, which is part of Quilter, acknowledges there will be some in the industry unhappy the scheme has not been scrapped altogether though.
"The scheme has had mixed reviews, with some accusing it of simply serving to massively inflate housebuilder share prices alongside the unintended consequence that some first-time buyers have been left as mortgage prisoners," she explains.
In the Autumn Budget 2017, Mr Hammond introduced a five-year £44bn housing programme, and banned stamp duty land tax (SDLT) for first-time buyers on properties priced up to £300,000.
In this year’s budget, Mr Hammond announced he is abolishing the stamp duty for first-time buyers on shared ownership properties valued up to £500,000.
This change will be applied retrospectively to first-time buyers who bought a shared ownership property since the previous budget.