Time Running Out for Prospective Help to Buy Scheme Participants

The clock is ticking for eager participants looking to take advantage of the Help to Buy scheme in England, which is set to be withdrawn in March next year. Launched in 2013 and heralded as an effective initiative to help thousands buy their first homes, the scheme has also been criticised by many for consuming billions of pounds of taxpayers’ money.

Help to Buy has also done little to solve the problem of skyrocketing property prices and has, for the most part, played directly into the coffers of the housebuilders taking part in the scheme.

Modified on a number of occasions over the past decade, the initiative will be withdrawn in its entirety at the end of March 2023.

However as it takes time for interested parties to be successfully enrolled in the initiative, the deadline for applications falls much sooner. In fact, anyone looking to take advantage of Help to Buy will now have to submit their applications no later than October 31.

This semi-official deadline date was only revealed in May, and subsequent polls have discovered that almost three-quarters of first-time buyers are unaware that this is technically when the scheme comes to an end.

Is now the time to buy?

With the deadline on the horizon, housebuilders are increasingly pushing their available and near-completed projects on interested parties. But there are those within the real estate and finance sectors who are warning overly eager parties of the risks of diving in at the deep end without full and careful forethought.

Sarah Coles, senior personal finance analyst at investment firm Hargreaves Lansdown, has urged caution among those who may be caught up in the final rush for available homes.

“You might be tempted to race for the door before it closes,” she said.

“However, if you’re in too much of a rush to get to grips with what you’re getting into, you could be in for a nasty surprise in five years’ time.”

Help to Buy was launched by George Osborne in 2013 with the aim of getting the housing market back in gear after the financial crisis. As it stands, the scheme provides homebuyers with the opportunity to borrow between 5% and 20% of the full purchase price of a newly built home (40% in London) from the government. A standard 5% deposit is also payable by the buyer.

This means that in London, those who qualify for the scheme need only arrange a mortgage for 55% of a property’s total value. The scheme is only available on new-build properties, and total property values are capped differently in different regions of the country, from £186,100 in the north-east to £437,600 in the south-east to £600,000 in London.

The government loans are interest-free for the first five years, after which interest applies, starting at a low rate of just 1.75%.

Who is suitable for buying assistance?

Technically speaking, anyone over the age of 18 can apply to take part in the Help to Buy scheme. But as organising a 75% mortgage (on average) is likely to prove difficult in most parts of England (where average house prices are currently hovering at around £300,000), the scheme does not offer a great deal of relief for low-income individuals and households.

Instead, experts continue to state that the Help to Buy scheme in its current form is really only of any use to those with a high annual income level but low savings.

In addition, as the living cost crisis continues to escalate, coming up with even a 5% deposit in many parts of the country (London especially) is likely to prove impossible for most average earners.