Time is Running Out for New Savers to Get a Help to Buy ISA

Time is Running Out for New Savers to Get a Help to Buy ISA

The government-backed Help to Buy ISA is only available until 30 November to new savers, before it is pulled on 1 December.

The Help to Buy ISA has been scrapped in favour of the Lifetime ISA, which is also designed to make it easier for first-time buyers to move into their home. 

If you opened your Help to Buy ISA before this date then you can keep saving into your account, but time is running out for new savers to open an account before the deadline.

While the ISA scheme is ending, the Help to Buy equity loan scheme will run until 2023. However, it will be restricted to first-time buyers purchasing newly-built homes.

What is the Help to Buy ISA?

The Help to Buy ISA is a tax-free savings account introduced in 2015 to help first-time buyers save up a deposit and get onto the property ladder. 

For every £200 saved, the government adds an extra £50 (25%), up to a maximum of £3,000 on savings of £12,000. 

The minimum amount needed in order for the government to issue a bonus is £1,600 (which leads to a £400 bonus). Once savings have reached £1,600 the government bonus can be claimed at any time. 

Accounts can still be opened with just £1, and savers will not face penalties for withdrawing funds early. Anyone who owns an account in advance of the deadline will need to claim their bonus by December 2030. 

Building for the Future

As an alternative, first-time buyers can now purchase a Lifetime ISA, which also provides free government cash on savings up to 25%. 

Moreover, because self builders and custom builders are ineligible for Help to Buy, the National Custom & Self Build Association (NaCSBA) is working to create a Help to Build Equity Loan Scheme.

Help to Build will mirror the existing Help to Buy loan scheme, except the loan is paid to the mortgage lender upon completion of the self build rather than to the builder upon legal completion of the sale of the new build.

According to NaCSBA, “It would ensure the delivery of more and better homes that more people aspire to live in and that communities are happier to see built. It would help move the UK off the bottom of the world league for the number of self build homes that are built.”

It was reported in 2018 that the Help to Buy ISA scheme would be ending, following figures suggesting the scheme was only favouring the wealthy, and that the average household benefiting from Help to Buy earned £55,000. 

The scheme had also been criticised for helping to spike the cost of housing due to the increased demand, without compensating for the supply. 

This post first appeared on https://www.homebuilding.co.uk

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