MONEY WATCH FINANCE
GOVERNMENT HELP TO BUY SCHEME FOR NEW BUILD HOMES
The current Help to Buy scheme is available where buyers put forward a 5% deposit supported by the government Help to Buy equity loan of up to 20% of the property value. However, this is changing from 1st April 2021 and the bad news for new home buyers is there will be no extension. Housing Minister Christopher Pincher has pledged there will be no extension for the Help to Buy scheme in England when it comes to an end on 31st March 2021.
From 1st April 2021 a more restricted version of the Help to Buy scheme will come into place until March 2023. There will be regional limits on the value of properties that can be bought through the scheme. Sales will be to first-time home buyers only, purchasing newly built homes.
The government has already extended two key deadlines for builders by two months for the existing scheme. This acknowledged the impact of the first Covid-19 lockdown.
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Buyers who had a reservation in place before 30 June and have been significantly affected, can request Homes England to assess their situation and if necessary, look to provide an extension to legally complete by 31st May 2021.
Fears have also been raised that completions will be held up by the high demand in the mortgage market coupled with the stamp duty holiday which ends on the same day, Homes England has already had to apologise after it stepped in to clear delays from one backlog.
But despite pressure from the industry to extend the overall cut-off point for sales to be completed, the Ministry of Housing, Communities and Local Government appears unmoved.
No plans to extend Responding to a written question, Pincher agreed there had been disruption but said changes had already been made to accommodate this and no further deadlines would be moved.
“The government recognises that there have been delays caused by Covid-19. That is why on 31 July a two-month extension was announced to the building completion deadline from 31 December 2020 to 28 February 2021,” he said.
“The legal completion deadline for the purchase remains 31 March 2021.
“The government also announced an extra measure to protect existing customers who have experienced severe delays as a result of coronavirus.”
Pincher continued: “We believe these measures provide sufficient time for developers to build homes delayed by Covid-19 and protect customers whose purchases have been significantly delayed. There are no plans to extend the current scheme further.
You can apply for the new scheme from 16 December 2020
First-time homebuyers who are eligible for an equity loan can borrow up to 20% (40% in London) of the purchase price of a new build home. Check with your homebuilder that they are registered for the scheme before you apply.
How much you can spend on your home will depend on which region it is in.
Region
North east North west
Yorkshire and The Humber East Midlands West Midlands East of England London
South east South west
You pay a 5% deposit of the full purchase
price of your new home at exchange of contracts and arrange a repayment mortgage of at least 25% of the full purchase price.
You will not be charged interest on the equity loan for the first 5 years. Interest fees start at 1.75% and rise each year in April by the Consumer Prices Index (CPI) plus 2%. You pay a monthly management fee of £1 for the life of the equity loan.
An equity loan is secured against your property in the same way as a repayment mortgage. You must repay the equity loan when you sell the home, pay off your repayment mortgage or reach the end of your equity loan term. However, you can repay all or part of the equity loan any time before then.
To find out more about the scheme and how to apply, a financial adviser/mortgage broker may be able to help you decide if Help to Buy Equity Loan is right for you.
Price cap for Help to Buy homes April 2021 to March 2023
£186,100 £224,400 £228,100 £261,900 £255,600 £407,400 £600,000 £437,600 £349,000
For further information please contact Peter Hunt on: 0121 503 0961
www.moneywatchfinance.com
THE MIDLANDS PROPERT Y GUIDE MONE YWATCH F INANCE
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