The government is drafting an extension to the Help to Buy equity loan scheme, according to reports.
According to FTAdviser's sister title the Financial Times, plans are being drafted to extend the Help to Buy scheme beyond the December deadline to prevent homebuyers “losing out” due to delays caused by the coronavirus, as construction sites temporarily closed.
The current Help to Buy equity loan scheme in England is due to be replaced from April 2021, with a new scheme restricted to first-time buyers, under which regional property price caps will also apply.
To qualify for the current scheme homebuyers need to purchase a property built by December 31, 2020. They can then borrow up to 20 per cent of the cost of the new-build from the government, and up to 40 per cent in London.
But the pandemic has led to delays with property completions, leaving many at risk of missing the December deadline.
Government figures told the FT discussions were taking place to resolve the issue, and an announcement was expected as early as Friday. Details are yet to be finalised, however.
In response, Craig Hall, head of broker relationships and propositions at Legal & General Mortgage Club, said: “Developers faced a deadline at the end of this year to complete properties eligible for the current scheme, before a new version of Help to Buy, limited to first-time buyers, is launched in April 2021.
“Today’s news that the government is drawing up plans for an extension to Help to Buy will give developers much more certainty around which planned sites will still be eligible for the current scheme. This will be particularly important as many housebuilders will be revising their timetables for completion in light of the impact of the Covid-19 lockdown.
“An extension will also help to support the growing demand for Help to Buy amongst homebuyers, including buyers with smaller deposits who now face a much more limited choice of high loan-to-value mortgages."
He said L&G research had shown 13 per cent of first-time buyers now plan to use the scheme, who hadn’t considered Help to Buy before the current crisis.