Help to Buy ISA – time is running out
Sophie Hockey, Conveyancing Executive in Coodes Solicitors’ Residential Property team, encourages first time buyers to act quickly to take advantage of the Help to Buy ISA.
The Help to Buy ISA has helped thousands of people buy their first home. Between 1st December 2015 and 31st December 2018, a total of 286,604 bonuses were claimed. However, it is due to end later this year. First time buyers should therefore act quickly to take advantage of the scheme.
Between its launch on 1st December 2015 and 31st December 2018 the Help to Buy ISA supported 218,371 property completions, including 18,567 in the South West. The scheme has undoubtedly helped many people get onto the property ladder more quickly. Interestingly, the average buyer on the scheme is 27, compared to the average first time buyer age of 30.
Are you a first time buyer and need advice on the Help to Buy ISA?Contact our team
How does the Help to Buy ISA work?
If you are saving to buy your first home, putting money into a Help to Buy ISA will boost your savings by 25%. That means that for every £200 you save, you will receive a government bonus of £50. The minimum government bonus is £400, so you need to have saved at least £1,600 into your Help to Buy ISA before you can claim your bonus. The maximum government bonus you can receive is £3,000.
Does the home I want to buy qualify for the government bonus?
In my experience, most purchasers are aware of how they qualify for a Help to Buy ISA. However, fewer people understand that you also have to qualify for the bonus. The bonus cannot be used for the deposit due at the exchange of contracts, to pay for solicitor’s or estate agent’s fees or any other indirect costs associated with buying a home. Your solicitor or conveyancer will claim the bonus between exchange and completion.
To qualify for the government bonus, the property you are buying must:
- Be in the UK
- Be bought with a mortgage
- Have a purchase price of up to £250,000 (or up to £450,000 in London)
- Be the only home you own
- Be where you intend to live
Are you affected by this issue? Do you need legal advice?Contact our team today
When will the scheme close?
The scheme will be open to new savers until 30th November 2019. Help to Buy ISA account holders can, however, continue saving into their account until 30th November 2029 when accounts will close to additional contributions. The Help to Buy: ISA government bonus must be claimed by 1st December 2030. Always consult your solicitor before closing your account to make sure this is being done at the correct time.
You may also want to consider alternative schemes to help you buy your property. My colleague Jane Stewart explains the key schemes in her recent blog.
Coodes is registered as a Help to Buy ISA scheme member and we are pleased to be able to apply for the bonus on behalf of clients. We will also confirm your eligibility to receive the bonus and ensure that the property being purchased meets the criteria. This involves us submitting the relevant documentation including a payment request and applying the bonus funds towards completion of the purchase of the property.