Since its launch in April, 7,000 buyers have already used the scheme to buy newly built houses, and the Chancellor’s talks with mortgage lenders and house builders in the past week have laid the groundwork for its expansion to all houses in January 2014.
The scheme gives buyers with a 5% deposit a loan of up to 20% on the property that is interest-free for the first five years. This second loan, whilst enabling more people to buy, does add an extra layer of complexity to the process of agreeing a mortgage and buying a property, and the extra burden of making sure things go smoothly inevitably falls on the shoulders of the conveyancer.
Conveyancers have to get to grips with a 67-page pack and for each transaction must liaise with the regional agents that administer the scheme and complete the paperwork to a strict deadline.
In addition they need to explain to their clients the various implications of this second loan and the responsibilities that go with it in terms of repayment – for example, repayment of the first mortgage will trigger repayment of the loan.
Mortgage advisers and buyers should also be aware that the loan is not fixed to the amount that is initially borrowed and is instead linked to the market value of the property at the time of repayment.
Help to Buy clients must therefore ensure that they appoint a conveyancer who knows their way around the scheme. As this approach has been part of the New Buy and FirstBuy schemes – albeit on a smaller scale – there are specialist conveyancers around the country that are already well up-to-speed and so will be able to hit the ground running and deliver an efficient service.
I have been approached by people who want to use the scheme but have been turned away by high street solicitors who are put off by the volume of paperwork required or are asking for extra fees to cover the additional work. The Conveyancing Association’s advice to new buyers is to choose their conveyancer carefully and not to settle for anything less than an expert.
Kathryn Taylor is a spokesperson for the Conveyancing Association and managing partner at Gordon Brown LLP