Will Help to Buy ISA fuel price increases for first time buyer?

Will Help to Buy ISA Fuel Price Increases for First Time Buyer?

April 13, 2017 11:00 am Published by

Britain’s housing market is famous for going in one direction – up. In April the average price of a house in the UK was £286,000. In London, this price more than doubled; in the capital, properties go for an average of £594,585. So will Help to Buy ISA fuel price increases for the first time buyer?

With little being done to ensure the extra 250,000 houses needed each year get built, it’s clear the first time buyers face a different situation to their parents, and one unlikely to change in the near future.

Therefore many first time buyers will welcome the government’s new addition to the Help to Buy scheme – the Help to Buy ISA.

Under the scheme, which launches in autumn 2015, each saver who puts away £200 as a deposit will get another £50 added by the Government, up to a total of £15,000. So, a first-time buyer saving £12,000 will get a £3,000 top-up.

The ISA is aimed at the bottom end of the market, restricted to houses valued up to £250,000, or £450,000 in London.

Some believe the ISA could increase prices by increasing competition, hitting the already saturated lower end of the market.

Property lawyer and partner at Irwin Mitchell, Gillian Coverley, told The Independent that, while an increase in the number of buyers with deposits would boost the construction industry, it could “potentially lead to house price rises and inflated values as there is much more competition at the bottom end of the market.”

However, the same was said of the original Help to Buy scheme, which many are calling for the government to promise to renew past 2016.

Just 3% of total property purchased used that scheme, meaning it would’ve had the negligible effect on overall prices, while helping many buy their first home.

Mark Hayward, managing director of the National Association of Estate Agents, praised the new ISA:

“This is exactly what is needed to engage the first time buyer market, particularly as we have seen the current criteria under the MMR constraining aspirations to buy a home”.

So will Help to Buy ISA fuel price increases for the first-time buyer?

The ISA is available per person, so a couple could have one each and combine it to buy a home. Even groups of individuals could club together with their bonus and buy a house between them, as friends across Britain are increasingly doing.

Ultimately the ISA extends a helping hand to first-time buyers of the future, encouraging families to save.

David Grundy, chief executive of My Online Estate Agent, told the Express that since the ISA is available for 16-year-olds, parents should take the long view and take one out for their children.

“Parents who can afford it should encourage their child to open the ISA when they go to university and give them the £200 a month to pay in.

“This way they would graduate after three years with £7,200 in their deposit savings.”

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