Last week the government announced it was extending the completion deadline for the Help to Buy scheme. The original deadline had been 31 January, but this has now been pushed back to 17 March.
Those brokers with outstanding cases yet to complete have reported feeling confident about meeting the new deadline, but there was criticism of the stress the process has caused to clients.
Going through the wringer
Paul Neal, mortgage and equity release specialist at Missing Element Mortgage Services, said his firm took the decision early in 2022 to no longer take on any more Help to Buy applications.
He explained: “Due to the speed the market was moving we knew there would be so many problems with getting completions done on time. We really do feel for those first-time buyers whose dreams will be shattered by firms working at a snail’s pace.”
Adam Thomas, managing director of Thomas Group Financial Services, said he still had four Help to Buy cases yet to complete, and noted that the delays have frequently been down to issues around insurance on the developer end.
He said: “It’s often that they haven’t had the relevant insurance people round to sign off the build. They have exchanged but can’t complete until that is signed off, which is very stressful for the clients. For example, I have clients completing on Friday, and the property still needs to have the sealant done, and it hasn’t been cleaned yet. They are happy to complete because they have been through the wringer, they are sick of it and want it done.”
The impact of delays
Matt Coulson, director of Heron Financial, said that he had seen clients forced to pull out of Help to Buy purchases ‒ at times only a week or so before completion ‒ due to the combination of delays to the build and the shifting situation with affordability.
“The really sad thing is that a lot of them should have completed six or eight months ago. They have reserved a property that should have been completed in the middle of 2022, and that building process has dragged and dragged, through no fault of their own. So an extended offer is required, in the meantime interest rates have gone crazy, and now that person who probably should have been living in that new apartment can no longer buy it.”
The need for flexibility
Jane King, mortgage and equity release adviser at Ash Ridge Private Finance, said that her Help to Buy cases were all “done and dusted” last year, and suggested that this sort of deadline was the only way to withdraw the Help to Buy scheme.
She continued: “Setting a deadline for completion made sense, however with developments being pushed back due to supply problems and mortgage offers expiring and needing extending, there would have to be some flexibility.”
However, Thomas suggested the deadlines had not been helpful, as they had been introduced with little warning and were not widely advertised.
“Some of the developers don’t even know about the deadline being extended. It’s more stressful for the client as they are always the last to know,” he added.
The Help to Buy replacements
King pointed to measures like Deposit Unlock and the mortgage guarantee schemes as alternative options in place for clients who might previously have looked to Help to Buy, but noted that there is no real replacement to the equity loans which had made the scheme so popular.
She added: “I know a lot of commentators thought that this scheme was a bit of a scam, allowing builders to make inflated profits. However it did help a lot of people who would otherwise not have made it onto the property ladder.”
According to Thomas, there are still plenty of options for those clients who might have previously sought out a Help to Buy mortgage, such as shared ownership schemes, the First Homes scheme, and joint buyer sole proprietor mortgages.
Thomas also highlighted concessionary purchases. “Downsizing parents gift equity to the kids, they are inheritance tax exempt, and mean that the client doesn’t need to provide their own deposit. I have had a couple of these complete this year.”
Thomas added that these are not schemes that regular first-time buyers are likely to be familiar with, so it’s important for brokers to act as educators in highlighting all of their options.
