Homes England has confirmed a one-month extension for completions under the government's Help to Buy scheme after some builders said homes would not be ready by the end of this year.
This aim of the extension is to give homebuyers enough time for their homes to be built and a new-home warranty received before the scheme ends on March 31, 2023.
The equity loan scheme is in the process of being wound down, having ceased receiving applications at the end of October.
Originally, the scheme required homebuyers to legally complete by December 31.
But last week (December 2), Homes England said some home builders had made it aware that they will be unable to meet the first longstop date and were consequently having to cancel reservations.
Homes England is a non-departmental public body sponsored by the Department for Levelling Up, Housing and Communities.
To “avoid customer detriment”, the public body said it will not enforce the original December 31 deadline if a home builder can notify it in writing that it is unlikely to reach practical completion.
Home builders now have until January 31, 2023, to finish building homes under the scheme and to organise new-home warranties.
They must notify Homes England before December 20 if they intend to use the deadline, according to the statement published last week.
Chief executive of mortgage technology firm Smartr365, Conor Murphy, said while a nice sentiment, the one month extension “will not go far” in helping developers or buyers.
He added: “Nonetheless, this is good news for those with an authority to proceed (ATP) letter and should encourage a slightly smoother end to this popular scheme, which has already helped over 300,000 first-time buyers.”
Scheme down 26%
The Help to Buy scheme saw a massive slow down in the second quarter of this year, with completions down 26 per cent compared to the same period in 2021.
The scheme, introduced almost a decade ago, allowed the government to offer up to 20 per cent of a newly built house or flat’s value (40 per cent in Greater London) in the form of an equity loan, with the home buyer able to put down a minimum 5 per cent deposit.
It was updated in April 2021 with new regional price caps and was restricted to applications from first time buyers only.
From April 2013, when the scheme began, to the end of June 2022, a total of 369,104 properties were bought with an equity loan, with a total loan value of £23.1bn.
Brokers have said they are concerned about what will fill the gap in solutions for first-time buyers created by the end of the Help To Buy scheme.
L&C Mortgages associate director of communications, David Hollingworth told FTAdviser last month that developers have started looking at Deposit Unlock, which is the most obvious solution and is picking up traction from lenders.
The indemnity scheme was developed by the Home Builders Federation and its members. It is designed to help borrowers secure a new-build home up to a value of £330,000 with a deposit of just 5 per cent.