How can brokers prepare for the final months of the Help to Buy market?

Affordable housing schemes look set to play an even more important role

How can brokers prepare for the final months of the Help to Buy market?

The number of properties bought using Help to Buy has seen a fall in the scheme’s final months, which can be attributed to the fact that eligibility was restricted to first-time buyers and new regional price caps have been introduced.

Despite this, Help to Buy has been a vital scheme for many buyers since its launch in 2013, and with a cost-of-living crisis now impacting buyer affordability, it is believed affordable housing schemes will play an even more important role in helping many people on to the property ladder.

“With the deadline for buyers to submit their property information form to Homes England now brought forward to October 31, brokers will need to brush up on alternative schemes that can help fill the gap the equity loan scheme leaves,” according to Craig Hall (pictured), director of new homes financial services at LSL.

Hall explained that the role of new build mortgage advice is going to become more complex with a combination of public and private replacement schemes.

Equally, he believes that brokers will have a duty of care to their clients to ensure that any mortgage offers that may have expired are extended well before the March 31 completion deadline.

The success of Help to Buy and the role of independent advice

Even though the Help to Buy equity loan scheme is soon set to end, Hall said the support it offers to buyers is just as relevant today as when it launched in 2013.

Between October 01 and December 31, 2021, 8,913 properties were bought with an equity loan from Help to Buy, a significant decrease of 41% compared to the same period in 2019.

“To really understand the importance of Help to Buy, we need to look at the overall role it has played in Britain’s housing market,” Hall said.

Since 2013, the equity loan scheme has backed more than 355,000 property purchases, with first-time homeowners accounting for 83% of all transactions.

“Now, rising house prices, a cost-of-living crisis and increases in interest rates mean that many will need all the help they can get to step on to the ladder,” Hall added.

Read more: Cost-of-living crisis – is there a silver lining?

For those buyers seeking out support, Hall explained that independent advice will be more important than ever to help them find the solutions they need.

However, he said there are a host of schemes for the post-Help to Buy market now emerging, and, as a result, new build mortgage advice is arguably going to become more complex than ever before.

Hall believes that advisers will need to be clued up on all the schemes that could help their clients to take their first step into homeownership.

A whole host of alternatives

“So, what are the substitute solutions that brokers could propose?” Hall asked rhetorically.

He said that there is good news for prospective homeowners as there are already some alternative schemes.

For example, the government’s Shared Ownership scheme provides another affordable route into homeownership.

“The recently launched First Home Schemes is another example, which offers newly built homes to first-time buyers with a minimum discount of 30% compared to market value,” said Hall.

Read more: Govt launches First Homes scheme

According to Hall, private home ownership schemes may also prove popular; Deposit Unlock, which offers 95% loan-to-value lending on new build homes, was launched last year with 17 major housebuilders in conjunction with the Home Builders Federation.

“More developers are expected to be announced as the project expands its reach. It is encouraging to see the industry collaborating to offer solutions for first-time buyers and this is key in such a complex market,” said Hall.

Hall added that there are a number of other private homeownership schemes under different guises which LSL are currently doing their due diligence on to inform both its AR and DA brokers that are part of the PRIMIS network or TMA Club.

He believes this will help provide LSL’s brokers with the information and education needed to offer well informed advice to its clients on the range of solutions available.

With a number of other schemes currently going through FCA approval, Hall outlined that there will be even more choice in the market in 2022/2023.

“For now, there is ‘no silver bullet’ that replaces the highly successful Help to Buy scheme,” Hall said.

However, over the year ahead, Hall believes that many will be looking to brokers for alternative solutions, and while these may not yet fill the void Help to Buy leaves, he said they could go some way to helping buyers step on to the ladder.

“It is therefore vital that mortgage brokers stay engaged with lender BDMs and their club or network over the forthcoming months, specifically regarding lender criteria, product innovation and the emergence of new private homeownership schemes,” Hall concluded