Sources say government will not formally extend scheme but will give builders more time to complete homes
The government is set to amend the rules of the current Help to Buy equity loan scheme to give builders more time to finish constructing homes, Building’s sister title Housing Today understands.
Two separate industry sources told the webiste the government will announce the change to the existing scheme later today after the stock market closes.
It is understood the government will not officially extend the current iteration of the scheme, which is due to expire on 31 March.
But it will change how the scheme is administered to allow housebuilders much more time to get those homes sold under the scheme actually built.
This is because under the rules set out by Homes England, which administers the scheme on behalf of government, housebuilders have until now been told they have to give the agency three months to process the Help to Buy application, which can only be submitted once practical completion of a home has been reached.
This has had the effect of meaning the practical deadline for building homes under the existing scheme has been 31 December. The change is thought likely to give housebuilders anything up to two to three months’ more time to finish homes sold under Help to Buy.
The Help to Buy scheme supports sales to those without large deposits by offering buyers a 20% equity loan to help their purchase.
Since its inception in 2013, it has helped 224,000 households buy a new build home, supporting sales worth almost £75bn, at a cost of £16bn.
The need for an extension has been voiced strongly in recent weeks by housebuilders concerned over the impact of the lockdown construction hiatus on sales made under Help to Buy.
Housebuilders have informed thousands of buyers that covid-related delays in build programmes mean that purchases that would originally have benefitted from the government assistance will now not be able to complete in time because homes will not be finished.
The Home Builders’ Federation has estimated that 18,400 sales will fall unless the scheme is extended, with 7,700 of those sales from buyers who will not be eligible to qualify under the new version of the scheme in April.
Shares in listed housebuilders rose earlier this week after the Financial Times reported that ministers were drawing up plans to extend the Help to Buy scheme beyond its December cut-off date for new sales. The newspaper said “three government figures” confirmed that Whitehall discussions were taking place to resolve the issue. It said that while an announcement was expected as early as Friday, the precise details were yet to be finalised.
One of the industry sources said the change was being made after the stock market closed this afternoon because of concerns over the impact on share prices of the story earlier in the week. It is thought there will be no official announcement or press release, with the change most likely to take the form of an update on Homes England’s website.
Homes England has been contacted for comment.