Help-to-Buy ISAs only helping the ‘lucky few’, says charity

With increasing prices, the ISA scheme introduced by the government is failing to cover a vast amount of starter homes, due to a lack of availability and first-time buyers’ inability to raise necessary funds.
When the UK government introduced their Help-to-Buy ISA in 2015, the aim was to ensure that first-time buyers would benefit from a ‘bump’ in the size of their deposit when buying a home. Available on all homes up to £250,000, or £450,000 in London, the ISA has been used by many to gain more attractive rates on their mortgage repayments. New research, however, has shown that the savings account does not aid the majority of first-time buyers across the UK as much as previously thought.

For many, the ideal starter home is a two-bedroom property with enough space for those wishing to start a family, but with asking prices exceeding the cap on 65% of properties in London and almost a third of homes outside the capital, many first-time buyers are still finding themselves at a distinct disadvantage. More worryingly, due to sky-rocketing house prices, even those who do qualify for the Help-to-Buy ISAs are still struggling to save enough for a deposit.

With prices for two-bedroom homes reaching as high as £551,025 in East Molesey in Surrey, far outside the government’s cap, UK property experts have found that many young adults are still finding themselves stuck in the rent trap.

“The Help-to-Buy ISA only helps the lucky few who are better off, or able to live with their parents while they save for a deposit,” said Campbell Robb, chief executive of housing charity Shelter. “Soaring housing costs have left millions of people stuck in a rent trap and struggling to save anything towards a home of their own.”

According to the charity, the greatest issue is the lack of affordable homes being built, with many developers opting to build more expensive three-bedroom homes as opposed to smaller two-bedroom alternatives.

While the government is planning to raise the cap to £450,000 across the entire country next year with lifetime ISAs, many believe the problem lies with the lack of funding for cheaper new-builds that will enable first-time buyers to gain a foothold on the property ladder. For those looking to sell the picture is also relatively bleak, as pressure to lower asking prices to encourage a sale increases, reducing the return investment on their home. But sellers can always talk to property buying companies, who purchase any home for cash at competitive rates to ensure a quick house sale.

Looking to sell your home fast? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property