The Home Builders Federation (HBF) is currently in talks with the government about extending the Help to Buy scheme and encouraging them to review a potential stamp duty holiday in an attempt to help boost the housing market once lockdown restrictions are lifted.
Help to Buy
The trade body is proposing that the current version of the Help to Buy Scheme, which is currently due to end in April 2021, is extended which will help support a speedy recovery of the sector.
The existing Help to Buy scheme is open to any buyer of a new-build home. It aims to help buyers onto the property ladder by offering loans of up to 20% of the property’s value (up to 40% in London) to people with a 5% deposit. They then take out a mortgage for the remaining amount from a participating mortgage lender.
The current scheme is due to end in April 2021 and a new version of the scheme will run from April 2021 to March 2023. The new Help to Buy scheme will be restricted to first-time buyers only and to houses with a market value up to new regional price caps.
If it ends when planned all qualifying sales transactions will need to be agreed by December 2020. Given the current delays in the property market due to Covid 19 it makes sense to look to extend the current scheme and give the housing industry more time to recover.
Stamp duty holiday
The HBF has also proposed the implementation of a stamp duty holiday to encourage people to buy a property or move home. The Royal Institution of Chartered Surveyors has also called for a stamp duty freeze for buyers.
The thought process behind the holiday would be to allow developers to get through the current crisis and keep them building when the lockdown restrictions have been lifted.
The Governments ban on all non-essential house moves will have a significant impact on income from house sales and small builders will be especially vulnerable to collapse as the don’t have large cash reserves to keep them afloat. By accessing Government funding and having an active market encouraged by a Stamp Duty holiday after lockdown might be enough to keep the diverse range of developers when the industry re-opens.
Will the Government step in to help support the housing market recovery?
The government has taken a number of emergency measures to help people and businesses during the pandemic. For example, mortgage holders can take a three-month payment holiday, including landlords.
Financial support packages and loans are also helping thousands of businesses across the UK. Many employers have “furloughed” their staff until further notice, which is another government-backed scheme.
By helping support the mortgage market by extending Help to Buy and implementing a Stamp Duty holiday we could see a quicker recovery and the property market moving once again.
If you are currently looking at Help to Buy and need any details on the current scheme or the proposed changes please do get in touch.