New figures show government backed housing schemes have created 25,000 new homeowners to date.
The first thing to note is that Government backed housing schemes are nothing new. Government backed schemes date back to the 80’s when Thatcher introduced the ‘Right to Buy’ scheme, and more recently, Help to Buy (HTB) which has developed from predecessor schemes ‘Home Buy Direct’ & ‘First Buy’. The main thing to note is the current HTB scheme is applicable to new build properties only.
Clients and other stakeholders often get lost in the sea of Conveyancing when it comes to these schemes. We act for clients across the property spectrum from Shared Equity or Shared Ownership properties, to residential and commercial acquisitions costing millions.
Much of the work is similar. We check the legal title and advise clients on covenants and relevant Lease terms, which will have a bearing on their short term interests, such as occupying the property; through to their long term interest in resale and long term values. We also secure finance charges and also ensure other crucial outcomes such as vacant possession. All of these are relevant to the HTB Scheme.
Rightly or wrongly, the Government designed the HTB scheme as even more process driven than the Conveyancing process. It must be noted, that the current guise is slightly simpler than its predecessors, with an equity charge of 20% coming from one source, rather than the 10% contributions from the HTB agency & relevant developer respectively. The HTB scheme adds two further key milestones to the Conveyancing process. You need an ‘Authority to Proceed’ (ATP) from the HTB agency which allows the developers Solicitor to forward contract papers. You then need your mortgage offer and valuation report in place to enable your Solicitor to forward the relevant forms to request the ‘Authority to Exchange’ (ATE).
Having dealt with these cases first hand, they become quite enjoyable in the same way as ironing. A little too taxing but the repetition is satisfying in an unnerving way.
Whether the second phase of the HTB Scheme is a success, which sees it extended into the general property market, is very much a waiting game. There have been many concerns voiced about people abusing the scheme for second homes, something the Chancellor has been quick to dampen.
Further concerns have been voiced about its effect on house prices which have been widely reported to have risen aggressively in recent months, with fears of overheating. The former governor of the Bank of England, Sir Mervyn King, said the scheme should not be extended to the wider market.
One question I always pose is why the scheme is extended to purchase prices of up to £600k. That’s well over double the UK average property price, & significantly more than required adjustments for the London market. I question whether the scheme will have a detrimental effect on the speed of the sales in the wider market. The new build market is very specialist, which is why we have a specialist new build division. Developers also have specialist Solicitors acting for them, meaning the process is generally efficient. As with all Conveyancing, you only need one party involved to delay the chain. My concern is the adaptation of the entire legal market to the scheme and whether the scheme will affect a market which our economy relies on so heavily. One thing is certain; nothing.
For further guidance on the Help to Buy Conveyancing process or other property related matters, please contact Rick Barrow on 01625 523 988 or email mail@JBGass.com