In his Budget delivered on 18 March 2015, the Chancellor of the Exchequer, George Osborne, announced further proposals to stimulate what is seen to be the vital end of the housing market involving first time buyers. It has long been recognised that if people are not able to move into their first home, this can have a downward effect on the rest of the housing market.
It is fair to say that a combination of the original Help to Buy scheme (by which the Government were prepared to make deposits available to first time buyers in certain circumstances) and increased confidence that the housing market has improved in the last couple of years. However, the Chancellor has made an announcement allowing first time buyers to have additional help in saving for a deposit by introducing a new Individual Savings Account (ISA). This product extends the existing Help to Buy scheme in that a tax free Government contribution is provided to each person who has saved into a Help to Buy ISA at the point they use the savings to buy their first home. For every £200 a first time buyer saves, the Government will provide a £50 bonus up to a maximum of £3,000 on a total of £12,000 worth of savings.
There are limitations on the Help to Buy ISA as follows:
- It is only available for first time buyers.
- It is available from autumn 2015 through banks and building societies.
- The bonus will help first time buyers purchase a home worth up to £450,000 in London or £250,000 elsewhere in the UK.
- Each first time buyer can only open one Help to Buy ISA during the lifetime of the scheme.
However, each individual can have a Help to Buy ISA so two people purchasing together can receive a bonus.
If you need advice on purchasing your first home or any aspect of the conveyancing process, contact us.