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Mar 27 2015

“If You Have a Pound I’ll Give You Another 25p?”

Sounds like a pretty good offer deal on the face of it!  Well, out of the battered red briefcase – held aloft by Chancellor George Osborne – came this proposal and was one of the big announcements from the recent budget. 

The Government initiative is aimed at helping people to buy their first home in the form of a “Help to Buy ISA” that will top up first-time buyers savings who are putting away money for a deposit.

Essentially, if it all comes to fruition after all the details are finalised, this is how it will work:

• For every £1 you save the Government will give you 25p and will match that up to a maximum of £200 each month, up to a total of £12,000.  So, you save £12,000 and you'll actually have £15,000 to play with.

• The ISAs should be available from this autumn and will stay open to first-time buyers for four years.  Once you have one there's no time limit on how quickly you have to save and no time limit on when you can use the Government's bonus.

• Although they won't be available until later this year you'll be able to open one with (up to) a £1,000 deposit.  That way ministers say first-time buyers can start saving now and still won't lose out if they've got £1,000 together by then.

• The ISAs are only for people (or groups of people) buying their first home to live in.

• If you're buying a home on your own you can use one Help to Buy ISA.  If you're buying it with someone else you can both get one.  If three of you are buying a house together you can all still get one each and use all three ISAs to help get you started…and so on.

• The ISA will only be available on homes worth up to £250,000 (or £450,000 in London).

As with any scheme there are usually the yays and the nay camps and the naysayers of the move say that it will push house prices further out of people's reach, due to the lack of new homes available.  To my thinking the ISA is a positive and good idea, why wouldn’t it be?  However, I do agree with the second part of the observation, that of the lack of supply.  Of course there is, that is another issue though, but with the recent changes announced in planning policy, that are allowing the freeing up and development of brownfield sites for housing, that may go a little way towards helping in that direction too.

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