U.K. Reviewing Support for Help-to-Buy Program
(Bloomberg) -- The U.K. government is weighing options for the future of the Help to Buy program, aiming to soften the blow for housing developers that have become dependent on the stimulus, a person with knowledge of the plans said.
A revised version of Help to Buy, which offers interest-free loans to help home buyers with small deposits, was announced in the 2018 budget, extending its scheduled expiry to 2023. Ministers are now evaluating how to ensure a smooth transition at that point, the person said, asking not to be identified as the plans are private.
The governing Conservative party introduced the Help to Buy program -- which supercharged homebuilders’ profits and bonuses -- to counter a shortage of new construction and help first-time buyers. A soaring number of consumer complaints and the perception of corporate greed is testing the Tories’ political will to continue supporting the sector. The budget document setting out the plans for a revised Help to Buy program last year categorically ruled out an extension.
Policy makers are also weighing sanctions on builders that develop poor quality or badly designed homes, possibly blocking them access to Help to Buy, the person said.
The program has been revised before. Housing Secretary Robert Jenrick outlawed leasehold properties from the program after it emerged that some builders had sold houses on long leases with escalating rent clauses. Policy makers are now mulling further steps to ensure that homes built with the government support meet minimum quality standards, the person said.
The government is publishing a design code in an attempt to ensure minimum standards. It wants local authorities to take that national code and implement local versions tailored to specific regional needs.
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