Conveyancers need help with Help to Buy

Solicitors and conveyancers will have seen Chancellor George Osborne’s announcement this week regarding the governments Help to Buy scheme and its extension in January 2014. The current Help to Buy initiative enables buyers to purchase newbuild properties with a deposit as little as 5 per cent with the remaining deposit (up to a maximum of 20 per cent) being provided via a secured second loan which is interest free for the first five years. The government is proposing that the scheme will be extended in January 2014 to existing properties as well as newbuild.

The scheme is complex and I would strongly recommend that conveyancers who haven’t already seen the Help to Buy paperwork should start familiarising themselves now with the scheme and its operation. Being a specialist newbuild practitioner I am often contacted by clients who have gone to their high street solicitor and been turned away due to the volume of paperwork required to be completed in a short space of time or have been asked to pay excessive charges  for the additional work involved. It is essential that clients use an experienced conveyancer who can advise them properly on the complexities involved.  

The current scheme is operated by regional agents on behalf of the government and conveyancers who are asked to advise on the scheme should be prepared to deal with the additional paperwork involved. A 67 page solicitors pack is issued with the draft paperwork, this needs to be read in depth prior to advising clients.  Clients will need to be advised in detail on the legal aspects of the government loan and the implications of none payment when the loan falls due. There are a number of circumstances which will trigger repayment of the loan, for example repayment of the first mortgage, which clients must be briefed upon in depth. It should be made clear to clients that the loan is a percentage of the market value and not fixed to the amount initially borrowed.  

First mortgage lenders will need to be contacted regarding the scheme and approval will need to be sought to the terms of the secured second loan. The conveyancer  is also required to provide the lender with a set of guidance notes regarding the scheme.  

There are also strict scheme deadlines in terms of exchange and completion which must be adhered to via the submission of ‘Solicitors Forms’ requesting authorisation from the local scheme operator to exchange and complete. The conveyancer should make sure that the relevant supporting documentation (valuation reports, CML forms, mortgage offers) are attached to the paperwork submitted.

The government are also stating that a mortgage guarantee scheme will be launched in January 2014 - further details as to exactly how this scheme will operate alongside the Help to Buy scheme are expected in due course with which conveyancers will have to familiarise themselves in order to ensure they are prepared for these important changes in the new year.