Chancellor George Osborne gave first-time buyers unexpected but welcome cheer with a particularly feature of his latest Budget.
Help to Buy ISA
Mr Osborne announced plans for a new Help to Buy Isa, where first time buyers will receive an additional £50 for every £200 that they save for a deposit. The scheme will be capped at £3,000 per £12,000 saved and a person will only be able to open one account. However, the scheme is not capped at one account per household, therefore people buying together can both receive the bonus.
Additionally, there is a limit on the price of properties that savers using the Help to Buy ISA will be able to buy. These are £450,00 for homes in London and £250,000 for homes in all other regions. The scheme goes live in the Autumn.
Unsurprisingly, the scheme has been widely welcomed in the industry, but there are concerns that some savers will chose to spend the additional cash for other reasons.
One of those urging concern is Ray Boulger, of mortgage brokers John Charcol, who believes that the scheme needs to be, ‘robustly policed to make sure the savings are not used for other purposes.’
He continued by saying, ‘more first-time buyers say finding the deposit is a bigger problem than finding the monthly payments and so the Help to Buy ISA will bring forward the dream of home ownership for many.’
Critics also argue that the scheme helps those who are struggling to raise a deposit, but does not help those who cannot get a mortgage. Jonathan Harris, of mortgage brokers Anderson Harris, acknowledged that it, ‘is good news that first-time buyers will get Government assistance with their deposit.’
However, Harris says that the big issue, ‘is that even if a first-time buyer can get together a deposit, there is no guarantee that they will be able to get a mortgage.’ He goes on to note that, ‘tighter rules under the mortgage market review mean many people who shouldn’t be struggling to get a mortgage are doing so.’ This, Harris believes, ‘requires Government intervention.’
Adrian Gill of Your Move and Reeds Rains estate agents was more positive, saying, ‘Help to Buy is the Chancellor’s trump cared yet again.’ Gill believes that, ‘this significant new ISA scheme will help thousands of aspiring homeowners accumulate what they need to jump onto the property ladder.’