Everything You Need to Know About the ‘Help to Buy’ Scheme Extension

Coronavirus delayed everyone’s plans. For those looking to make use of the Help to Buy equity loan scheme in England, it has been tough. The UK Government extended the scheme twice already, but the backlog and demand are still large. Here is everything you need to know about the Help to Buy scheme extension, as well as other similar support programmes from the UK Government.

What is the Help to Buy equity loan scheme?

It’s an attractive programme that allows buyers to get support from the government on their home purchase. Nearly 300k homes have used the scheme so far, and according to the BBC, “the scheme, in its current form, is coming to an end in England. However, data from Homes England obtained through a BBC Freedom of Information request showed that, as of the end of January, there were 16,691 sales still to be completed under the current scheme.” The guide for the scheme that is ending can be found here. It allows qualified applicants to get 40% of a London home and 20% of an outer England home funded by a loan from the UK Government. However, the APR is quite high, typically at 5.2%. Your mortgage and deposit must be at least 60% of the property price, you must furnish a 5% cash deposit, and the home’s value can’t be higher than £600k. It now finishes at the end of May 2021, but only if you already had a reservation in place with Homes England. The Help to Buy scheme that will replace the current iteration is only open to first-time buyers and has more restrictions in place.

Why was it extended?

The short answer? Covid. The pandemic caused crushing halts to the construction sector as workers tested positive and had to stay home. Supply chains were disrupted, and lending institutions operated on a skeleton crew. According to Gov.uk, “under the current scheme, new homes would need to have been finished being built by the end of December – the extension will mean the deadline will now move to 28 February 2021, helping thousands of customers to get the keys to their new home. The deadline for the legal completion of the sale will remain the same – 31 March 2021. The government is also announcing an extra measure to protect existing customers who have experienced severe delays as a result of coronavirus. Homes England, the government’s housing accelerator, will work with those who had a reservation in place before 30 June to assess their situation and look to provide an extension where necessary. In which case, they will have until 31 May 2021 to legally complete.”

This doesn’t apply to Scotland, Northern Ireland, or Wales, who have their own programmes that aren’t run by the UK Government.

What other government programmes exist?

Well, the new version of the Help to Buy equity loan comes into effect on 1st April, 2021. It’s only open to first-time buyers though, and has lower limits on minimum property values. Other than that, it’s nearly identical to the current scheme. Documentation is available here. Some more general homebuyer programmes are:

• Shared Ownership - This lets you part-rent and part-buy a home. We wrote a guide on this programme here.
• Homes for Londoners - A programme of shared ownership just for London residents who can’t find anything on the open market and need support. It features mostly new builds.
• 95% Mortgage Guarantee Scheme - Similar to the Help to Buy mortgage guarantee (which ended in 2016), this provides some government backing for buyers with a 5% deposit. According to Which?, “under the terms of the scheme, the government will guarantee the portion of the mortgage over 80% (so, with a 95% mortgage, the remaining 15%). This might sound complicated, but in practice, it just means the government will partially compensate the lender if a homeowner defaults on (fails to pay) their mortgage.”
• Shared Ownership Resale - Buy a share of a home that was previously purchased by a Shared Ownership participant. Shares range up to 75%. Priority is given to armed forces members.

Niche programmes for buying or renovating

If you meet specific conditions, you may benefit from these smaller-scale programmes:

• Forces Help to Buy - Armed services personnel can use this scheme to unlock up to 50% of their salary to renovate or buy a home.
• Self-Build Portal - Resources and support for those looking to self-build or custom build their own home.
• Discounted Sales - Some boroughs and councils will offer properties at a reduced rate to those with a local connection. It’s worth contacting the boroughs where you grew up, work, or currently live to see if there are any offers available.
• Older People’s Shared Ownership - Lets those 55 years and older buy only 75% of a shared ownership property but then not have to pay rent on the rest.
• Home Ownership for People with Long-Term Disabilities (HOLD) - This programme can help you get a home if the usual shared ownership properties don’t work for your disability need.
• Right to Buy/Right to Acquire - This allows you to purchase your council house after 3 years of occupation. You get a discount on the property, but the landlord has to agree, and there are other conditions.

Schemes in NI, Wales & Scotland

The devolved governments have a vested interest in providing programmes for their constituents. Most of the Help to Buy lookalike schemes have ended in these countries, however. For the most up-to-date home programmes on offer visit their local government websites. The schemes for Scotland are available here, the schemes for Wales are available here, and the schemes for Northern Ireland are detailed here. Northern Ireland in particular has an interesting concept of co-ownership, which is similar to shared ownership, but not exactly the same.

As with any home purchase, either on your own or through a scheme, you’re going to need an expert conveyancer. Find and compare quotes from loads of local conveyancers for free using our tool today.