More good news for first time buyers
Thursday 19th March 2015
Following the changes to Stamp Duty Land Tax that were announced in December last year (click here to view our article on the reforms) which saw a significant reduction in Stamp Duty for most first-time buyers there has been more good news announced today from the Chancellor. First-time buyers are being offered up to £3000.00 each to put towards a house deposit through a new help-to-buy Isa.
How will it work?
First time buyers will be encouraged to save in a help-to-buy Isa with the incentive that for everything they save the government will boost it by 25%, so for every £200 they save, the government will give them £50.00.
The maximum that can be boosted in the Isa is £12,000.00 which will be topped up by the government to £15,000.00. This represents a potential £3,000.00 leg up the property ladder for every first-time buyer. One key point to note is that this is offered to each person and not to each house, which means a couple could be eligible for £6000.00 towards their purchase.
Key practical points
- The cost of the home is capped at £450,000.00 in London and £250,000.00 everywhere else in the UK.
- You must save a minimum of £1600.00 before the government top-up will begin
- You are able to deposit an initial lump sum of £1000.00 and can then top this up by £200.00 each month
- To get the maximum bonus you will need to save for five years by putting in £200.00 a month
The government bonus is not added until you come to buy a home so before that you are able to make withdrawals from your account.
Does this solve the difficulties facing first time buyers?
Sadly, no. Although the various Help to Buy Schemes, SDLT reforms and now the Help-to-Buy Isa do definitely aid first time buyers in reality getting on the property ladder can still seem like an impossible dream to many. The help-to-buy Isa will help people scrape together a deposit but it still does not address the undersupply of homes which has driven up prices and in turn made mortgage repayments so high. Having said that, this Isa should be recognised as another step in the right direction.