The government is to hand up to £3,000 to aspiring first-time homebuyers (aged 16 or over) in a bid to help more people get onto the property ladder.
In a key budget measure, the chancellor announced the state will contribute £50 for every £200 a would-be buyer saves towards a deposit using the new help-to-buy scheme.
The help-to-buy ISA means that if a first-time buyer is able to save £12,000 in a tax-free account, the government will add £3,000 – which could significantly reduce the length of time they need to save to buy a home. Anyone who has never owned a home before can open an account, which means a couple buying together can claim up to £6,000 towards their first property.
However, critics claim the scheme would again fuel demand for homes without increasing supply, and argue that the £2bn cost to taxpayers over the next five years could instead have been used to provide thousands of affordable homes.
The chancellor said the help-to-buy ISA combined “two of our most successful policies… to tackle two of the biggest challenges facing first-time buyers – the low interest rates when you build up your savings, and the high deposits required by the banks”.
Help-to-buy ISA: How does it work?
Savers can start with a lump-sum deposit of up to £1,000 and add up to £200 a month, which is boosted by £50 for every £200 saved. The minimum savings to qualify for the scheme are £1,600, but there is no monthly minimum investment.
Money in one of the new accounts can be accessed at any time, but the government payment is only added if and when it is used as a deposit on a home.
For expert legal advice when buying a new home, whether you are a first time buyer or already on the property ladder, Switalskis specialist Conveyancing department can help. Call the team on 0800 138 0458 or complete our contact form and we will get back to you.