At 6pm on the night of Halloween 2022, something scary will happen, applications close for the Help To Buy scheme, with the scheme ending on the 31^st of March 2023. In order to be eligible for the scheme, the property must be completely built and liveable, and have received a new-home warranty by 31 December 2022. The scheme has proved to be hugely popular and will undoubtedly leave a large void that needs replacing. Given the current economic environment, with rising house prices coupled with soaring inflation and rising interest rates, many have been looking at what other options are available and what’s next for the new build sector.

The Help To Buy scheme has provided vital support for many homebuyers since its launch in 2013. Since inception, the equity loan scheme has backed more than 361,075 property purchases [1], with first-time homeowners accounting for 83% of all transactions.

There are a variety of other options that could help to fill the void of the Help To Buy scheme. Shared Ownership is another popular route, which has been around for many years – a good solution for those with smaller deposits. Other options include Help to Build, First Homes scheme, Family Assist mortgages and Own New Market Mortgage.

Help To Build has recently launched and unlike Help To Buy, it is not restricted to first time buyers and could be an interesting solution for certain borrowers who wish to go down the self-build route or commission a house builder to build a custom home for them. According to government data, the average new build property is valued at c£400,000 in the UK compared to older properties where the average value is c£272,000. With this gap in average house prices for new build versus existing stock, perhaps one solution might be to build more affordable, smaller properties. That way more homes get built and become accessible from an affordability perspective.

One key market challenge is supply which is struggling to keep pace with demand. The ability to generate increased supply may be hampered by rising material costs and the supply of materials to build homes. The Government, along with housing associations, are likely to become under increasing pressure to provide more housing and meet their objective to provide 300,000 new homes by 2025 [2].

With the Help To Buy scheme coming to an end, brokers are going to need to ensure their knowledge encompasses all available schemes and ensure that they are keeping up to date with any changes to requirements. It is crucial that brokers stay connected with lenders and their club or network over the next few months, particularly concerning lender criteria, product launches and the emergence of new schemes.

The changing economic environment has created unforeseen challenges to the current scheme if offer extensions or material changes to the original offer are required. This will require a new Approval to Exchange form and for the Homes England Help To Buy affordability calculator to be re-run using current lender revert rates, and not rates from when the original loan was submitted. This has the potential to create challenges for applicants and is something that brokers should be considering closely should these circumstances arise. Brokers have a duty of care to their clients to ensure they are supported throughout the whole process and do not miss the deadlines in place. At Vida we are committed to supporting our brokers and their customers to help navigate them through this increasingly complex market. The demand and focus on the New Build market is expected to grow significantly post Help To Buy, and in my role as New Build Sales Manager I am excited to work with brokers to support the new build sector. 

As the Help To Buy Scheme draws to a close, it is more important than ever for prospective buyers to be aware of the wider options available. Many first-time buyers, and those looking to move, are not aware of the alternative schemes, and with many households’ finances stretched due to the cost-of-living crisis and others impacted as a consequence of Covid, they may feel that getting onto the property ladder is now unattainable. The new build and first-time buyer market will become increasingly specialised given the range of alternative schemes available and the increasingly complex circumstances of homebuyers. Access to high quality mortgage advice has arguably never been more important and it’s essential that brokers stay close to their BDMs or Key Account Manager to ensure they understand all the options available to advise their clients.