Recent additions to the Help to Buy Scheme
Trainee Legal Executive, Nicola Newton, looks at the impact of Help to Buy Scheme so far
The Help to Buy Scheme was introduced in 2013 and so far it appears to be quite a success. The Government published figures in September of 2015 suggesting that since its launch, over 110,000 people have bought a home through the scheme. Of those, 89% of scheme completions have been made by first-time buyers, 95% of scheme completions took place outside of London, the average house price was £186,000 (significantly below the national average) and also half of Help to Buy completions have been for new-build homes.
The apparent success led to the introduction of the new Help to Buy ISA in December 2015.
How does the new scheme work?
- Open up a Help to Buy ISA account – the providers include Barclays, Halifax, HSBC, Lloyds, Nationwide, Natwest and Santander to name a few.
- Save up to £200 a month but in the first month you can deposit up to £1,200.
- You can then receive a bonus of 25% of your savings from the Government provided you have saved at least £1,600, up to a maximum bonus of £3,000. For example saving £5000 will result in a total of £6,250 or saving £12,000 will result in a total of £15,000.
- When you are ready to buy you close your ISA account and your solicitor will apply to receive your bonus.
The individual must:
- be 16 years of age
- have a valid National Insurance number
- be a UK resident
- be a first-time buyer and not own another property anywhere in the world
- not have another active cash ISA in the same tax year
The property must:
- be within the UK
- not be a second home or buy-to-let property
- not be rented out after you buy it
- be up to a maximum price of £250,000 or up to £450,000 if the property is within London
- be purchased with the assistance of a mortgage
Benefits of the scheme
The scheme has a number of benefits that seems to make it more attractive than the others currently in place (Help to Buy Equity Loan or Mortgage). Most importantly it is applied to each individual rather than the household. This means if two first-time buyers open a Help to Buy ISA you can effectively receive a bonus of up to £6,000 if each of you manage to save £12,000. The scheme is also set to keep paying out until December 2030 so those who might only be able to afford smaller payments each month have a long time to save, however you are only able to open a new Help to Buy ISA account until 30th November 2019. You are also able to withdraw money from the account at any time, though you will not be eligible for the bonus on any amounts that you have withdrawn. Even if you decide not to buy a house you don’t lose any money, you simply don’t receive any Government bonus. The money will still be tax-free and you will still receive interest due. If you are hoping to buy your first home within a few months you may still be able to receive a bonus if you time your deposits over three calendar months; for example you could pay £1,200 in the first month on 31st March then £200 during April and then £200 on 1st May meaning it could take as little as 31 days to receive a bonus of £400.
For more information, visit the Government’s website: www.helptobuy.gov.uk
Our property lawyers in our Chesham and Amersham offices are able to assist with all of your conveyancing matters. Please call us on 01494 773377 if you require any advice arising out of this article.