It has not been a good summer for Help to Buy. First, the Help to Buy Isa hit the headlines when we learned that homebuyers who had saved in the scheme would receive the 25 per cent government bonus only once contracts had been exchanged on their new home, and therefore it would be of no use for the initial deposit.
Some branded the revelation a “scandal” because it went against the stated aim of the scheme. In his 2015 Budget speech, then chancellor George Osborne said the products would “tackle two of the biggest challenges facing first-time buyers – the low interest rates when you build up your savings, and the high deposits required by the banks”.
Of course, the cash bonus of up to £12,000 is not to be sniffed at and is still a valuable contribution to the costs of buying one’s first home, but the Government was disingenuous in its marketing. Let’s not forget that regulators are the first to complain when financial services firms fail to satisfy the “fair, clear and not misleading” requirements in their communications with customers.
In another blow for the Help to Buy brand, brokers have complained they are being cut out of the loop by the Homes and Communities Agency when it comes to helping their clients apply for the equity loan component of the Help to Buy Equity Loan scheme. After a broker has submitted an initial application on behalf of clients, the agency says its agents should not communicate with them about the ongoing progress of the case.
A recent clampdown means HCA agents will now send the Authority to Proceed – confirming that the client is eligible to receive the equity loan – only to the client, the housebuilder and the solicitor. It says this is to reduce fraud risk and data protection concerns.
The Help to Buy Equity Loan scheme can be a fantastic route to homeownership for first-time buyers, but it is extremely complicated for consumers to understand because it involves so many parties – the housebuilder, the HCA and the mortgage lender. An experienced broker is vital to helping this process to run smoothly and holding the customer’s hand along the way. Neither consumers nor mortgage advisers will thank the HCA for shutting them out.
It also seems ironic that government agencies are introducing extra hurdles to the homebuying process while, at the same time, ministers push for seven-day mortgages.