The Help Buying Real Estate grant scheme has to close for applications five months early, which is a blow to thousands of new buyers desperate for a home.
The loan scheme, which has given out an estimated £22 billion in taxpayers’ money since its launch by George Osborne in 2013, will close new applicants by the end of October.
Homebuilders – whose sales and share prices have been massively pushed up by the grant – were told the program would be halted this fall instead of the end of March during an 11-day phone call with Homes England, the quango responsible for new construction projects. affordable housing.
Homes England assistant director Kasia Locherty then shocked call participants by ordering them not to tell the public about the changes. All communications must be handled by the quango itself, Ms Locherty is said to have said.
An industry source said: “We were surprised and disappointed to be placed in a position of not informing customers of the withdrawal in a timely manner.
“This is such a popular government policy – and it’s making millions in the treasury. They don’t seem to have thought about how upset young couples and families will be when they realize at the last minute that their first step up the housing ladder has just come up.”
Homes England admitted it had updated its website to reflect the October 31 deadline after being contacted by the Telegraph about the decision. The quango added that it would promote the shutdown schedule on its social media channels in the coming weeks.
Final loan applications will be accepted in October and will all be processed over the next five months.
A government source said the October deadline would give customers enough time to legally complete their home purchases before the scheme ends completely at the end of March.
Backbench MP Sir Iain Duncan Smith, the former leader of the Conservative Party, called the decision “disgraceful”.
He said: “The government has berated its successful results and is now turning a blind eye to an early shutdown. [It’s] hardly the action of a government that wants to make home ownership for everyone.”
Kevin Hollinrake, Conservative MP for Thirsk and Malton, and co-founder of Hunters Estate Agents, said he was not in favor of the Help to Buy scheme because it targeted new-build homes.
However, he said the Homes England move seemed “extraordinary”.
Mr Hollinrake added: “If they end something early that would last until March, that is clearly wrong. These things need to be done in a coordinated way, not in a piecemeal way. It needs to be done in accordance with government policies and timelines from the government.”
First unveiled by Mr. Osborne during his Spring 2013 Budget and originally designed for three years, Help to Buy was designed to help higher-risk home buyers who had been locked out of the real estate market.
The scheme – the largest government intervention on the market since Margaret Thatcher sold social housing – allowed people to buy a home worth up to £600,000 with just a 5 percent down payment. The government guarantees the next 15 percent of the loan for a fee, reducing the banks’ potential losses so they can offer cheaper mortgages.
In the years that followed, mortgage guarantees, co-ownership and Help to Buy Isas were added to the new derivations, among others. In the first year of operation, one fifth of the new-build homes sold were purchased with support from the Help to Buy scheme.
But rising interest rates and the country plunged into a cost of living crisis have raised concerns that some borrowers will be unable to repay their loans.