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Ministers face calls to extend the deadline for purchasing a house in England using the help-to-buy loan scheme, as buyers face losing thousands of pounds because of Covid-related delays in construction.
The government’s help-to-buy equity loan scheme, launched in 2013, allows people to buy a new-build home with a 5% deposit. The scheme was extended in July due to the pandemic, but ministers have refused to postpone the deadline any further.
Delays on building sites will mean that many developers are unable to build homes on time to meet the deadline at the end of March, leaving prospective buyers unable to take advantage of the loan scheme despite having paid out for legal and broker fees.
The scheme allows buyers to borrow a five-year interest-free equity loan that is 20% of a new-build property’s value, or 40% in London, and must be bought from a home-builder registered from a government-approved list.
Although construction has continued throughout lockdowns, building has been hampered by difficulties getting hold of materials such as timber, plaster and insulation, staffing problems on sites with workers off sick or self-isolating, and delays caused by social distancing restrictions in properties. This has been a particular problem in areas that have faced higher tighter restrictions for months longer than the rest of the country, such as the north-west.
Greg Saunders said he and his partner, David Leith, were devastated when their dreams of buying their first home fell apart.
Saunders, 31 and Leith, 36, were accepted on to the scheme in September after they found a four-bedroom townhouse on a small development in Salford, Greater Manchester. However, they were told two months later it would not be built in time to qualify for the scheme, leaving them unable to afford it. They had already spent about £2,000 on fees for their solicitor and mortgage broker.
“I was gutted, because you start to picture your whole life there, and we’d been accepted for everything,” Saunders told the Guardian. “All the funds were in place, the paperwork was in place, and then to have the dream taken away from you – the dream of owning your first home and not having to live in expensive rented accommodation any more.”
When the Guardian spoke to Jamie McInerney, 33, his partner was due to be induced with their first baby the following day, but he said they had already had several sleepless nights. They are first-time buyers who reserved a family home on a plot in Houghton Regis, Bedfordshire, in May 2020.
Covid-related delays meant that the sale has already fallen through once, but the developer confirmed the house would be ready in February once the government extended the scheme deadline. They are now worried again that the house will not be ready in time.
McInerney said his new family were “stuck between a rock and a hard place” as they would have to move out of their rented accommodation by March but did not know whether they would have a home to move into.
He said it was cruel to punish his family for an issue that was not their fault. “The developers can always sell the property on to someone else. So they don’t lose out, really; the only ones losing out are people like myself”.
Saunders would like the government to extend the deadline for those who have already had their applications accepted and are in the middle of a sale. “The government need to safeguard those that are already in the help-to-buy scheme, and those who have had applications and mortgages approved, because there’s so many in the situation.”
A spokesperson from the Ministry of Housing said it was aware of the concerns raised and was continuing to monitor the situation. “While construction can continue during the national lockdown, we recognise there have been delays caused by the pandemic,” they said.
“That’s why we extended the help-to-buy build deadline by two months to 28 February 2021 and provided extra flexibility on the purchase deadline until 31 May 2021 to protect existing reservations made before 30 June 2020.”
A report from the government on the impact of the pandemic on home-building showed an average delay of three to eight months on build times.
Source: The Guardian
Keyword: Calls for help-to-buy deadline in England to be extended after Covid building delays | Help-to-buy scheme