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No interest-free extension for Help to Buy homeowners in blocks with dangerous cladding
Help to Buy leaseholders facing large bills to replace dangerous cladding will not be granted an extension on the interest-free period on their government-backed loans, the housing minister has said.
Responding to a written parliamentary question, Christopher Pincher said: “There are no plans to extend the interest-free period on Help to Buy equity loans.”
The scheme, launched in 2013, allows first-time buyers to purchase a home with a deposit of just 5% alongside a government loan of up to 20% (40% in London).
Under the terms of the scheme, the first five years of the loan are interest-free and from year six borrowers must start paying a monthly interest fee of 1.75%, growing by Retail Price Index (RPI) plus 1% every year.
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Despite some Help to Buy leaseholders having to pay high bills for cladding remediation, Mr Pincher said that no extension would be made to this five-year period.
Inside Housing recently reported how Help to Buy leaseholders have been blocked by Homes England, the administrator of the programme, from moving out of properties with dangerous cladding because of restrictions around sales of this type of property.
There has also been growing calls from Help to Buy homeowners for the government to extend the interest-free period to ensure that they are not burdened with additional costs on top of remediation bills, waking watch costs and high insurance premiums.
Read our analysis on how the building safety scandal is affecting those on the Help to Buy scheme
Mr Pincher added: “Government will provide grant funding worth over £5bn for the removal of unsafe cladding on buildings over 18m.
“Lower-rise buildings between 11m and 18m with a lower risk to safety will gain new protection from the costs of cladding removal through a generous new financing scheme. The government is conscious of the need to make any financing scheme affordable for leaseholders.”
Last month the government announced an extension of the deadline for completions by two months to 31 May.
