Help to Buy ISA, will it work?
Announced in the 2015 Budget a saving scheme to help first time buyers get on the property ladder. Will it work?
On the face of it, it looks a good scheme. A savings account specific to providing a deposit for property purchase with a cash bonus of between £400 and £3,000, dependent upon the amount saved. Savings can commence at the age of 16 which, if maintained until the “post-university/got a job now” years could provide sufficient funds for a modest first home deposit.
However, with a maximum monthly investment of £200, even with the government bonus, this is at least an 8 to 10 year savings commitment to produce a sufficiently large deposit to satisfy most lenders. Would the commitment be there?
Also, with even a five year plan, would the savings plan be chasing a continually rising market without ever quite reaching it?
However, there is nothing wrong with encouraging responsible savings. And it may reduce the amount of later-life loans taken out by parents desperate to help their children.
Time will tell whether this has any measurable effect on the fist time buyer market.