Help to Buy Isa scheme used to buy half a million homes: Govt – Mortgage Strategy

Help to Buy Isa scheme used to buy half a million homes: Govt – Mortgage Strategy

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The government’s Help to Buy Isa scheme had been used to buy 531,507 homes since its launch almost seven years ago to September last year.

The scheme closed to new entrants in November 2019.

The average value of a property bought through the scheme is £176,828, compared to an average first-time buyer (FTB) property price of £245,350.

Outside London, the maximum value of a property that can be bought through the scheme is £250,000 while the value is £450,000 in London.

The average UK property price was £295,000 in November while the average property in London cost £542,000.

The median age of a first-time buyer in the scheme is 28 compared to a national FTB’s median age of 30.

Hargreaves Lansdown senior personal finance analyst Sarah Coles says: “FTBs have been hamstrung by the Help to Buy Isa limit on property values. House prices have soared 44% since the scheme was introduced – leaving the £250,000 limit in the dust.”

“The savings scheme could become worthless for thousands of savers, and although the Lifetime Isa limit is much higher, unless the government rethinks how these limits are set – over time it risks a similar fate.”

“Outside London you can only buy a property worth up to £250,000 with a Help to Buy Isa, and within London you can only spend up to £450,000.”

“Both have fallen way behind average house prices, and with the average FTB price over £245,000, it risks eclipsing that too. Since the scheme was launched in 2015, house prices have climbed 44%, while the limit hasn’t budged. It means there are only three of nine regions in England where you could buy the average property with a Help to Buy Isa.”

“The average price of a property bought through the scheme is far lower than the average for first-time buyers overall. It means that people have either had to settle for a cheaper home or withdraw their cash without a bonus in order to buy somewhere worth more than £250,000.”

“The government needs to reconsider the limits on both the Help to Buy Isa, and the Lifetime Isa.”

“One sensible option would be to link them to house price inflation, so buyers have the security of knowing that however long they save for, and however house prices move in the interim, they will be protected.”

The government also revealed that 6,531 properties were purchased with the government’s Help to Buy equity loan scheme between 1 April and 30 September 2022.

This totalled £561m in equity loans and supported the purchase of £2,142m worth of property.

Since the scheme started on 1 April 2013 the total value of equity loans is £23.7bn while the value of the properties sold under the scheme totals £105.4bn.

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