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Major house builders saw their share prices jump on Tuesday amid reports that the government is planning to extend the Help to Buy scheme.
Shares in Barratt, the UK’s biggest developer, rose by 4.9% over the 24 hours to close of trading yesterday.
Berkeley’s share price increased by 4.4% over the same period, while Redrow matched Barratt’s 4.9% rise and Bellway climbed 5.2%.
Shares in Vistry, Taylor Wimpey and Persimmon all increased by close to 3% – on a day when the FTSE 250 Index only rose by 0.2%.
The rises came after the Financial Times reported that ministers are preparing plans to extend Help to Buy beyond its 31 December deadline, to avoid buyers losing out because of delays caused by COVID-19.
However, share prices slumped again on Wednesday morning as Taylor Wimpey posted a £30m pre-tax loss for the first half of 2019/20 caused by the pandemic hitting sales and completions.
Development programmes temporarily ground to a halt in March as the government froze the housing market in a bid to curb the spread of coronavirus, with most sites reopening at reduced capacity to enable social distancing.
Industry figures have warned that could mean a restricted number of homes will be available through the Help to Buy equity loan scheme by the time it ends in December.
The Home Builders Federation (HBF) estimates that around 18,000 sales could be affected.
David O’Leary, policy director at the HBF, said that “what may seem to be an arbitrary administrative deadline will have real-life consequences for thousands of families”.
Introduced in 2013, Help to Buy enables people to purchase a new build home with a deposit as small as 5% of the property’s value, with the government providing a further loan on the equity.
It has been used by more than 272,000 buyers, but has been criticised for mostly helping those who could have afforded to become homeowners anyway while dramatically driving up housebuilders’ profits.
A replacement scheme, set to launch in April, will be open only to first-time buyers and will include price caps on the homes sold.
The Ministry of Housing, Communities and Local Government has not confirmed it is considering extending the 31 December end date.
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