This afternoon George Osborne has announced a “Help to Buy ISA” for first-time buyers to give young couple and families the ability achieve the dream of home ownership despite the increased house prices seen over the last 18 months in many parts of the country.
This is apparently designed to “tackle two of the biggest challenges facing first-time buyers” low interest rates on savings and the high deposits required by the banks to secure a mortgage.
What does this mean?
Basicaly for every £200 a young buyer saves for their desposit to put down on their first home, the Conservative Government will top it up with £50.
With the average the average first-time buyer desposit across the UK around £15,000, a first time buyer would put down £12k with £3k coming from the government.
This ISA will be available by the autumn and is a follow up measure to the Government’s “Help to Buy” phased scheme – which includes a shared equity deal and a loan guarantee offer – which were introduced in April 2013 and October 2013 respectively and mildly boosted housing market sentiment.
5 key facts on the Help to Buy ISA
- So long as you open your account within the next 4 years you can save for an unlimited timeframe.
- You can make an initial deposit of £1,000 when you open the account – in addition to normal monthly saving.
- There is no minimum monthly deposit – but you can save up to £200 a month
- Accounts are limited to one per person rather than one per home – so those buying together can both receive a bonus.
- The bonus will be available on home purchases of up to £450,000 in London and up to £250,000 outside London
New Build Homes
The Chancellor indicated the launch of 20 housing zones across the country in order to address the UK’s serious housing shortage, especially in the South East of England.
This additonal supply should help conbtrol the rising house prices in the regions that have had very little construction over the past couple of years.
Also unveiled were two enterprise zones in Plymouth and Blackpool, which will boost the local economy and housing market recovery in those cities.
The Chancellor has announced the fire sale of Government-owned mortgages which it bought when it bailed out Bradford & Bingley, Lloyds and Northern Rock, which could trigger a flurry of remortgaging and a potential increase in mortgage rates.
What are your thoughts?