Hidden Help to Buy Deadlines


If you are in the process of purchasing a new home from a developer then you may have heard of the Help to Buy scheme. The government scheme provides interest-free loans to buyers to enable them to purchase a new property with only a 5% deposit. Those eligible for the scheme can apply for a help to buy loan of 20% of the property value, which would be used in conjunction with a normal mortgage for 75% of the property value and the 5% deposit to make up the full purchase price.

The loan is interest-free for the first five years and when the homeowner is ready to repay the loan the amount repaid will be 20% of the property value at the time the property is sold. The scheme that was launched in 2013 has helped many buyers to get a foot on the property over the years. The most recent scheme, which runs from 2021-2023, is now limited to first time buyers and there are regional caps on the price of eligible properties.

Whilst most people using the scheme will be aware that the scheme ends in 2023, many are unaware that there are additional deadlines that must be met for transactions to remain eligible for the scheme. Those that have applied for the scheme in 2021 must buy a property that is fully build-complete by the end of December 2021. Legal completion of the purchase must then be completed by the end of March 2022. If those deadlines are not met the property will cease to be an ‘eligible property’ for the Help to Buy scheme and the prospective purchaser would have to wait until the following year to reapply for the scheme in April 2022.

The same dates will then apply for 2022/2023 – the property must be build complete by 31 December 2022 with legal completion no later than 31st March 2023. Those that miss this second round of deadlines could miss out on their purchase altogether as there are currently no plans in place for a scheme after the current one ends. Developers should be aware of these deadlines and their sales agents should be communicating these deadlines to their buyers, but in practice this is not always the case. Few seem to be aware of these deadlines and there is no mention on the government’s Help to Buy website pages.

For those that might not meet this deadline, and do not want to wait to reapply in the following year, there should be no need to worry about losing deposit funds. The contract that purchasers will have entered into with the developer will have additional clauses added to them to ensure that buyers’ deposits are protected. In a typical property purchase, if a buyer is unable to complete on the contractually agreed date, the deposit could be forfeited and retained by the seller.

In the case of a Help to Buy purchase, if a buyer was unable to complete on the agreed date due to the property being ineligible for Help to Buy funding then the contract will stipulate that the developer must return the buyer’s deposit and reservation fees, less any costs that the developer has incurred. We are yet to see how this will be treated in practice, but we are hopeful that if developers do not achieve the required deadlines then they will not immediately seek to terminate contracts and refund buyers’ deposits but will continue to honour the reservations and wait for their buyers while the second round of funding is applied for.

To find out more, please contact a member of our Residential Property or New Homes Departments.