Help to Buy scheme extended to 2023 for first-time buyers
The scheme aims to help struggling buyers onto the property ladder by offering loans of up to 20% of the property’s value to people with a 5% deposit. They then take out a mortgage for the remaining 75% from a participating mortgage lender.
Help to Buy was meant to end in 2021 but will now run until 2023 when it will be scrapped altogether.
In the Budget notes, the government said the extended scheme (from 2021) will be restricted to first-time buyers only and to houses with a market value up to new regional price caps, including £186,100 in the north east stretching up to £600,000 in London.
Analysis published alongside the Budget reveals that the scheme has allowed six out of 10 users to buy a bigger property than they would have otherwise been able to afford.
And more than eight out of 10 buyers would not have been able to buy the same property without assistance.
Justin Gaze, head of residential development land at Knight Frank, said: “No industry should be reliant on government assistance indefinitely, so the decision by ministers to restrict the scheme to first-time buyers with regional purchase price caps is a sensible one.
“However, the ‘deposit gap’ that the Help to Buy equity loan scheme was established to overcome is still very much a problem.
“UK house prices are 37% higher than when the scheme was introduced in 2013 and the mortgage market for those with only a 5% deposit remains very thin.
“For prospective buyers, finding the funds for a deposit will remain the biggest barrier to home ownership.
“From 2023, the onus will move to mortgage lenders and the development community to help buyers bridge this gap.”