The ‘Help to Buy’ Initiative comes to an end
The help to buy initiative, launched in 2013 to kickstart the housing market after the last financial crisis, comes to an end in March 2023. It enabled households to buy a new build home with a 5% deposit and a loan for the remaining deposit. The scheme for this has now closed for any new applications as of the 31 October 2022, allowing time for loans to complete in time.
The deadline was announced by the Government, in May 2022, much earlier than expected causing a surge in demand from first time buyers and catching developers by surprise as they will have to achieve practical completion by 31 December.
Against a backdrop of increased costs of labour, materials and borrowing, new homes builders have until recently benefited from increased revenues, with a premium over second hand stock prices of up to 30% achieved in some locations, particularly in London.
The closure of the initiative coincides with the end of the Government’s Mortgage Guarantee Scheme on 31 December 2022, also designed to increase the supply of 5% deposit mortgages. Prices are likely to fall as a result, exacerbated by the impact of mortgage rate increases and economic volatility.
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Article written by Jason Rawlings, Associate Director at Aitchison Raffety