Applications for the new Help to Buy Equity Loan scheme opened in December 2020.
Since it was launched in 2013, Help to Buy has assisted more than 272,000 households get a foot on the property ladder by supplementing small buyer deposits with a government-backed equity loan.
For residential developers it has provided a welcome market stimulus. The Home Builders Federation credits Help to Buy with being the most successful intervention in the housing market ever and for doubling housing supply in recent years.
However, the existing scheme will end in the Spring, with the last completions on 31 March 2021.
Its replacement - which will be available until March 2023 - will be restricted to first-time buyers and properties are subject to new regional property price caps. Caps range from £185,100 in North East England, to £600,000 in London.
Whilst there has been widespread disappointment in the home building industry that the original scheme was not simply extended, most will grudgingly admit that its replacement is better than nothing. Help to Buy Mark II will still assist first time buyers become homeowners. It means that housebuilders can keep on building, preserving valuable jobs and maintaining skills.
There's no doubt that the housebuilding sector has been adversely impacted by the Covid-19 pandemic. According to Homes England, between 1 April and 30 September starts on site on programmes they are delivering were down 38%, with completions down by 25%, compared to the same period last year. Completion delays as a result of site pauses and social distancing measures mean that developers are now playing catch up.
Nor have housing shortages gone away. On the contrary, in a survey of 450 senior residential development staff reported in Housing Today, 60% said demand for their product was either at or above pre lockdown levels.
Whilst it is not as extensive as its predecessor, the new Help to Buy scheme will continue to boost demand at the bottom end of the market, which in turn should have a ripple effect further up the chain. In what has been a challenging time for residential developers, that's not to be sniffed at.
Secure Trust Bank's Real Estate Finance team has continued to support SME residential developers throughout the pandemic. We have a £100m fund ringfenced for this purpose, with flexible loans of £1m - £5m available.
For further information about our loan packages for the home building sector, please contact a member of our team for an informal chat.