Government will not formally extend scheme – but will give builders more time to complete homes, sources say

The government is set to amend the rules of the Help to Buy equity loan scheme to give builders more time to finish constructing homes, Housing Today understands.

Two separate industry sources told Housing Today the government is due to announce the change to the existing scheme later today after the stock market closes.


It is understood the government will not officially extend the current iteration of the scheme, which is due to expire on March 31.

But it will change how the scheme is administered to allow housebuilders much more time to get those homes sold under the scheme actually built.

This is because, under the rules set out by Homes England, which administers the scheme on behalf of the government, housebuilders have until now been told they have to give the agency three months to process the Help to Buy application, which can only be submitted once practical completion of a home has been reached.

This has meant the practical deadline for building homes under the existing scheme has been December 31. The change is thought likely to give housebuilders anything up to three months’ more time to finish homes sold under Help to Buy.

The Help to Buy scheme supports sales to those without large deposits by offering buyers a 20% equity loan to help their purchase. Since its inception in 2013, it has helped 224,000 households to buy a new build home, supporting sales worth almost £75bn, at a cost of £16bn.

The need for an extension has been voiced strongly in recent weeks by housebuilders concerned over the impact of the lockdown construction hiatus on sales made under Help to Buy.

Housebuilders have informed thousands of buyers that coronavirus-related delays in build programmes mean that purchases that would originally have benefitted from the government assistance will now not be able to complete in time because homes will not be finished.

The Home Builders’ Federation has estimated that 18,400 sales will fall unless the scheme is extended, with 7,700 of those sales from buyers who will not be eligible to qualify under the new version of the scheme in April.

Shares in listed housebuilders rose this week after the Financial Times reported that ministers were drawing up plans to extend the Help to Buy scheme beyond its December cut-off date for new sales. The newspaper said that “three government figures” confirmed that Whitehall discussions were taking place to resolve the issue. It said that, while an announcement was expected as early as today, the precise details were yet to be finalised.

One of the industry sources said the change was being made after the stock market closed this afternoon because of concerns over the impact on share prices of the story earlier in the week. It is thought there will be no official announcement or press release, with the change most likely to take the form of an update on Homes England’s website.

Homes England has been contacted for comment.

Following the FT story this week, a spokeswoman for the housing ministry declined to confirm whether or not ministers were working on an extension to the Help to Buy scheme, or how long any extension might last. The spokeswoman said: “The government continues to work closely with all parts of the housing industry to understand the challenges and opportunities they face.”