As we approach the middle of 2022, the dust is beginning to finally settle following the pandemic.
Although there are a few new obstacles such as the rise of living costs and inflation amidst the war in Ukraine, however despite all of that the property market continues to perform especially below the £600,000 mark in London as they qualify for the last stretch of Help to Buy.
However, Homes England has only recently announced they will end Help to Buy earlier than expected. What does this mean for many first-time buyers? Homes England has updated its website to confirm that they will stop accepting Help to Buy applications on 31st October 2022 five months before the scheme officially ends on 31st March 2023. This could potentially mean that several thousand home buyers who may have been planning to use the scheme in October to December will now not be able to.
After almost a decade of helping people purchase newly built homes, almost 300,000 properties have been bought through the scheme, giving households a step onto the property ladder. There will be a big hole to fill in order for transaction levels to continue to be supported.
However, as we move towards a world without Help to Buy, there is an alternative new scheme that’s been introduced called Deposit Unlocked. This scheme was developed by the Home Builders Federation, the body that represents housing developers, along with the reinsurance firm Gallagher Re.
Similar to Help to Buy, this scheme is exclusively just for new build homes and buyers can qualify with a 5% deposit, however unlike Help To Buy, Deposit Unlocks can help first and second time homebuyers and sees lenders loaning up to 95% loan to value (LTV) on new builds up to the value of £750,000.
The extended price range will be beneficial as prices have generally trended upwards in recent years, and Colliers predicts this will continue as well. It’s also been a while since second-home owners have had an opportunity to get financial support, this will help to unlock stagnation in the market as many are stumped by having to save for a significant stamp duty payment when needing to upside their homes. While the scheme is still very new, it should prove popular with buyers as an alternative way to purchase a new build home with a small deposit.
As well as with the existing schemes from the public sector such as Shared Ownership, First Homes, and the recent announcement of extending Right to Buy by the Government last week, it’ll certainly be interesting to see whether there will be more Government intervention to the first-time buyer market once Help to Buy finishes.
About the author
Nanette Hung is an associate director in Colliers residential team specialising in the new homes market in London and the south east. She works with developers and manages our sales teams.
To contact Nanette, please email Nanette.Hung@colliers.com