The Government has announced information on the new Help to Buy Scheme due to commence April 2021 until March 2023. The current equity loan scheme, introduced April 2013, has been successful in improving access to the market for first time buyers.
The new Scheme will continue to support buyers into ownership of properties falling below the regional first time buyer price threshold. However, it will also introduce new criteria which developers seeking to use the Help to Buy must adhere to. Such requirements seek to improve the quality and experience for new build purchasers.
The first requirement is that builders must belong to the New Homes Ombudsmen (NHO), and sign up to the voluntary scheme preceding its implementation.
Another requirement placed on developers wishing to use the Help to Buy scheme is that builders must sign up to the Building Safety Charter (when launched), if selling residential units under Help to Buy in blocks above 18 metres (or 6 floors whichever is lower).
Builders must also ensure that homes built from May 2020 comply with the most recent energy efficiency requirements, and those with a Home Builders Federation star rating should clearly communicate that rating on Help to Buy related communications and advertisements
Other requirements include that any ground rent on the sale of leasehold properties through the scheme be restricted to a peppercorn rent. It should also be noted that before completion of the sale, buyers are entitled to view the home, and this can be with their own surveyor.
The New Homes Ombudsmen
Government implementation of the NHO will bring the new build market in line with its counterparts by introducing a form of mandatory redress through legislation. Purchasers will be provided with a clear complaints route, and a right to access redress through alternative dispute resolution, all of which will work to enhance the protection of new build purchasers.
The NHO will grant various powers to ensure firstly that developers comply with standards set out in the new Code of Practice, and secondly, that any issues arising from new builds can be dealt with efficiently with the ultimate protection of purchasers in mind. The NHO will have jurisdiction across the whole of the UK to exercise these powers.
These powers include being able to make recommendations for resolving disputes and timescales for rectification. Where dispute resolution has been unsuccessful, the NHO can award compensation to the purchasers of up to £50,000, and request apologies and explanations from developers. They can also require developers to improve their services.
Further powers include requesting that developers undertake, or refrain from undertaking work, and finally to expel developers from the NHO, and publish details and reasons for this expulsion. Further implications of expulsion would include the need for developers to compensate or fund retention schemes for any consumers who had secured commitment with them prior to this expulsion. This emphasises the need for developers to comply with quality standards and consumer expectations set out in the Code of Practice.
Funding for the New Homes Ombudsmen will be sourced from developers, not purchasers, through various charging methods, some of which are based upon complaints being upheld. This acts as another compliance initiative, but also encourages developers to handle complaints properly when they first arise.
