When the Help to Buy equity loan scheme came to an end on October 31, Charlie Cook was thrilled that he’d made the deadline.
“I got lucky because someone dropped out and I got the last Help to Buy flat in my development.” That was in May this year and the development was St George’s Park in Hornchurch, where he is buying a two-bedroom flat for £411,000. Then his luck ran out. “Last week I got a letter saying they were really sorry, but it wouldn’t be finished until February.”
This pushes the project past the Help to Buy build deadline of December 31, 2022, meaning Cook’s new home no longer qualifies for the Help to Buy scheme and he can no longer purchase his flat. “It’s going to stop me from buying my first home,” he says. “It’s too late for me to find another Help to Buy development. I’m so upset and haven’t been given any answers.”
Cook, who is 28 and works in FinTech, says he had been saving for two years and had started looking in earnest for a property about a year ago. The Help to Buy scheme gave him the extra support he needed to get a foot on the ladder. Under the scheme, first- time buyers in London can purchase 60 per cent of a new-build property, with the Government having an equity share in the remaining 40 per cent. The equity loan is interest-free for the first five years.
Cook had his application accepted within a week in May, exchanged in June and then paid 75 per cent of his deposit. Until last week his developers continued to assure him that the work would be completed by the December deadline.
“They’re blaming things out of their control like bricks coming from [mainland] Europe and torrential rain. They were even affected by the Dartford tunnel protests as a crane had to turn back.”
Cook believes it will set his first-home purchase back a couple of years. “In the future, I’ll need to find an extra £160,000 [the equity loan amount].” He wrote to Homes England, which runs the scheme, but got a reply saying there was no room for an extension. His builders have also written to them, requesting an extension until March 31, 2023, the date by which sales need to be legally completed, but are waiting to hear back. “Homes England could give everyone who’s exchanged an extension,” says Cook. “It’s only been a six-month process for me. For some people it’s been a year.”
I feel like we’ll be renting forever
Alexandra Muresan, 35, is a vet who has found herself in a similar position. She and her partner had a 20 per cent Help to Buy loan authorised in April 2022 for a £434,000 three-bedroom house in Ebbsfleet. Unlike Cook, who knew about the December deadline when he signed up, Muresan only found out about it in August. “I assumed it just had to be built by the March 2023 completion date,” she says. “I never would have proceeded with it if I thought there was a risk we’d miss the deadline.”
Muresan’s builder told her in October there was a chance they would not make the December deadline due to drainage issues and labour and material shortages. “I’m gutted,” says Muresan. “We’ve been saving for 10 years and looking since 2019.”
Muresan has also exchanged contracts and estimates she has spent £2,000-3,000 on legal fees. Buyers should get deposits back if their sales do fall through but whether or not they get any money they have spent on brokers or legal fees depends on the developer agreeing to reimburse.
“We’re in our mid-30s and can’t afford to buy in London without the Help to Buy loan,” she says. “I feel like we’ll be renting forever.” Like Cook, she has had a standard reply from Homes England.
She has also written to her local MP, who is writing to them, and Michael Gove, Secretary of State for Levelling Up, Housing and Communities on her behalf, but is yet to receive a reply. “For people like us who reserved a long time ago, they should honour what was agreed,” she says. “No one cares, that’s how I feel.”
A lose-lose outcome for everyone
It’s not uncommon for building projects to run over, and recently, builders have been affected by supply chain setbacks caused by the pandemic and the war in Ukraine. Muresan doesn’t blame her builders for the delay. In fact, many builders will also lose out, says Stewart Baseley, executive chairman of the Home Builders Federation: “If, as a result of this bureaucracy, sales do fall through, they will need to try and re-sell homes in a much more difficult housing market. It will simply be a lose-lose outcome for everyone.”
The HBF estimates that a few hundred new builds won’t meet the December deadline and has been speaking to Homes England about getting an extension. “Inevitably given where and how new homes are built, there are sometimes unpredictable delays, not least currently as a result of supply chains issues beyond the control of individual developers,” says Baseley. “It would cause considerable anguish for homebuyers if they should miss out on their dream of home ownership as a result of an arbitrary administrative deadline and we are urging Homes England to be flexible.”
The three-month deadline between build and legal completion is not necessary and HBF points to The First Homes Early Delivery Programme, which had a similar timescale reduced from three months to one. “Homes England has already shown with other schemes that it accepts that there need not be three months between practical and legal completion,” adds Baseley. “Time is of the essence with transactions already being cancelled.”
Homes & Property contacted Homes England for comment and was told to speak to the Department for Levelling Up, Housing and Communities, because it set the policy framework around deadlines and extensions.
A DLUHC spokesperson said: “The end date for the scheme has always been March 31, 2023. We want to ensure no customer misses out on purchasing their home. To allow sufficient time for sales to complete by that deadline we expect all developers to have finished building the property by December 31, 2022.
“Help to Buy has supported over 369,000 households into homes of their own and will continue to help many more until the scheme ends in March 2023. This is just one of many ways the Government has made homeownership more achievable and affordable.”
In the meantime, those with delayed builds that will miss the deadline have started to take matters into their own hands. A Facebook group called “Lost out due to help to buy equity loan build deadline. Extension Required” has nearly 100 members nationwide after being set up a week ago, and a petition urging the Government to rethink the December deadline has gathered more than 300 signatures in just a few days.
These first-time buyers are hoping that those in charge will see sense and stop a bureaucratic deadline from preventing them buying the homes they’ve saved so long for. As Muresan says: “We only need a few extra weeks. It’s not our fault — we’ve done everything we could.”