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Help to Buy ISA announced
Chancellor George Osborne was about to close his Budget address, when he announced a new scheme to help would-be first-time buyers to save for a deposit.
The Help to Buy ISA allows would be buyers to save up to £200 a month, with the Government adding a further £50. This means that if the person saves the maximum allowed in a Help to Buy ISA – £12,000 – the Government will top it up to a maximum of £3,000 tax-free.
Another benefit is, the accounts are assigned to each person, rather than per house, meaning a couple buying together could receive up to £6,000 from the Government.
The product will be available for four years from the Autumn, but there is no time limit on filling up the ISA – this is ideal if you cannot set aside the maximum amount each month.
This initiative has been received warmly by the industry, and it is thought that the new product could boost demand among would-be homeowners.
As with most things, the true effects are likely to be determined by where home seekers are looking to buy – for example the £3,000 bonus will not go as far if the buyer is purchasing in London as it would if purchasing elsewhere in the country.
While the benefits of the scheme are obvious, without a substantial increase in the production of new homes, this is likely to act as another factor pushing up house prices.
The Government has promised an additional 275,000 homes by 2020, but this will still not be enough to stem price rises.
For more help and advice please do not hesitate to contact us at Hoskin Mortgages.