The government is considering extending the help-to-buy scheme due to the delays in the building of houses caused by the coronavirus crisis.
The deadline for the current scheme is December 2020.
Housing minister Robert Jenrick, and housebuilders, are pushing to extend the scheme by an extra three months in order for the industry to clear the backlog caused by the lockdown.
The Treasury hasn’t finalised a decision on the matter, however chancellor Rishi Sunak is coming under increased pressure from construction companies to help pull the sector out of recession.
The help-to-buy scheme, which began in 2013, allows people to get on the property ladder with a deposit of just 5% of the purchase price. The government then provides an equity loan of up to 20% outside the capital, and up to 40% within London.
The aim of the help-to-buy scheme was to allow people to buy homes at a time when mortgage lenders were asking for large deposits.
However, the scheme has been criticised for subsidising those who could have bought a home regardless, increasing the profits of housebuilding companies, and driving up the prices of homes.
The housing ministry said that the scheme had allowed for 272,000 people to purchase a new-build home between spring 2013 and March 2020.
A spokesperson for the housing ministry said: “The government continues to work closely with all parts of the housing industry to understand the challenges and opportunities they face.”
It is believed that 18,000 buyers may miss their chance to buy a subsidised home due to the delays caused by coronavirus.
Up to 40% of those 18,000 affected by the December deadline may be ineligible for the new scheme, according to the House Builders Federation (HBF).
Policy director at HBF, David O’Leary, said: “Coronavirus forced the home-building industry to shut down, and while builders are now back on site, working within strict safe operating guidelines, completions have inevitably been delayed.
“It is an obvious response to extend the deadline to allow for these delays, but as a result of inflexibility of the rules thousands of home buyers look likely to miss out on the opportunity to use help to buy and so be able to purchase a new home.
“With mortgages for first-time buyers now few and far between, help to buy is more important than ever. Reducing the availability of help to buy will have a knock-on effect, undermining attempts to increase the delivery of new homes at a time when the economic benefits that the industry brings are desperately needed.”
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