The purchase assistance program will close five months early Business

The Help to Buy housing grant scheme is due to close five months early for applications, dealing a blow to thousands of first-time buyers desperate to climb the housing ladder.

The loans scheme, which has handed out around £22bn of public funds since it was launched by George Osborne in 2013, will close to new applicants at the end of October.

Homebuilders – whose sales and share prices have been massively inflated by the grant – were told the program would end this fall rather than the end of next March in a call there. 11 days with Homes England, the quango responsible for new affordable housing.

Homes England deputy manager Kasia Locherty then shocked call participants by ordering them not to tell the public about the changes. All communication should be handled by the quango itself, Ms Locherty reportedly said.

An industry source said: ‘We were surprised and disappointed to be put in a position where we are not allowed to notify customers in a timely manner of its withdrawal.

“It’s such a popular government policy – and it also brings millions into the treasury. They don’t seem to have considered how upset young couples and families are going to be when they realize, at the last minute, that their first step on the housing ladder has just come up.

Homes England admitted updating their website to reflect the October 31 deadline after being contacted by the Telegraph about the decision. The quango added that it will be promoting the shutdown schedule on its social media in the coming weeks.

Final loan applications will be accepted in October and all will be processed over the following five months.

A government source said the October deadline would give customers enough time to legally finalize their home purchase before the scheme is fully liquidated at the end of March.

Backbench MP Sir Iain Duncan Smith, the former leader of the Conservative Party, called the decision “shameful”.

He said: “The government has trumpeted its positive results and is now turning a blind eye to an early closure. [It’s] far from being the action of a government wanting to make home ownership accessible to all.

Kevin Hollinrake, Conservative MP for Thirsk and Malton, and co-founder of Hunters Estate Agents, said he was not in favor of the purchase assistance scheme as it targeted new homes.

However, he said Homes England’s decision seemed “extraordinary”.

Mr Hollinrake added: “If they are ending something early that was supposed to last until March, that is clearly wrong. This work should be done in a coordinated way and not piecemeal. It should be done in accordance to government policy and government timelines.”

First unveiled by Mr. Osborne in his Spring 2013 budget and originally designed to last three years, Help to Buy was designed to help high-risk homebuyers left out of the real estate market.

The scheme – which was the biggest government intervention in the market since Margaret Thatcher sold council housing – allowed people to buy a home worth up to £600,000 with just a 5pc deposit . The government guarantees the next 15% of the loan for a fee, reducing potential losses for banks so they can offer cheaper mortgages.

In the years that followed, new derivations from the scheme included mortgage guarantees, co-ownership and Isas purchase assistance. In its first year of operation, one-fifth of new builds sold were purchased with support from the Purchase Assistance Program.

But rising interest rates and the country plunged into a cost of living crisis have raised fears that some borrowers may not be able to remortgage their loans.

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This notice was published: 2022-05-29 05:00:00

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