New Help To Buy ISA Scheme Launched

Young Buyers Can Save Tax Free

01.12.2015

Kate Rawlings, Press Officer | 0114 274 4238

Lawyers have welcomed a new Help to Buy ISA scheme which launched today (December 1st) and allows buyers to save for a deposit towards their first home, tax free.

The Chancellor, George Osborne, first announced the plans to help young buyers in his budget back in March and promised that, in some cases, the Government will top up their savings with a bonus worth up to a maximum of £3,000 per saver.

Research undertaken by Money.co.uk showed that despite the majority of first-time-buyers welcoming the scheme, up to half could shun the scheme because of the complex rules.

The Help to Buy ISA is only available to first time buyers.

Savers can make an initial deposit of £1,000 when opening an account and will receive a 25 per cent bonus from the Government, worth £250.

They can then save up to a maximum of £200 a month that also attracts a 25 per cent bonus, equivalent to £50.

The Government will pay the bonus whenever the saver takes out the money, as long as they have paid in at least £1,600.

The minimum bonus on the scheme is therefore £400.Savers need to save £12,000 themselves towards a deposit to claim the maximum £3,000 top-up.

Couples who buy together will be in a better position, as they can pool their tax-free Help to Buy Isa savings to give them a maximum of £30,000.

But even this may not be enough given that it will take four years and seven months to secure the maximum Help to Buy Isa bonus.

The average first-time buyer property costs £215,000 according to the Office for National Statistics and it could be far higher in another five years.

Given the lengthy time scale, the Help to Buy Isa won’t be suitable for people who want to get on the property ladder in the next year or two.

Savers need to be at least 16 years old to open an account and far-sighted parents may want to start saving as early as they can.

Helen Hutchison, an Associate and conveyancing specialist at law firm Irwin Mitchell, said that first time buyers and their families, who might want to help them on the property ladder, can’t afford to ignore the scheme.

Expert Opinion
Essentially this is an offer of free cash which could make a difference to young savers looking to buy their first home in today’s market.

Although there are some complicated rules, which include savers being unable to pay into a Help to Buy Isa and a standard cash Isa in the same tax year, it is still good news that the Government is acting to help young buyers get a foot onto the housing ladder.

We would advise anyone seeking more information on how they can benefit from the latest government schemes aimed at house buyers, including changes to Stamp Duty and Help to Buy Schemes to seek specialist advice from an experienced conveyancing solicitor.
Helen Hutchison, Associate