23/03/15

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.

 

23/03/15

About the author

Kitsons Solicitors - Sally Groom

Sally GroomAssociate

Sally is an Associate in our Residential Property team in Torquay

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