Help To Buy ISA: Everything You Need To Know

Year Published: 2015

The Chancellor announced the creation of a new Help to Buy ISA in the budget this March. This ISA will be available to people wanting to save from 1 December 2015. Home buyers could begin using the cash and bonuses they generate as earlier as January 2016, although most will want to save for longer in order to build up a larger pot and benefit from a larger bonus.

If you’re a first time buyer, you can save up to £200 a month towards your first home with a Help to Buy ISA and the government will boost your savings by 25%. That’s the equivalent of a £50 bonus for every £200 you save. You can receive a bonus of up to £3,000 in total.

This means if you save £12,000, the government bonus will boost your total savings to £15,000.

The scheme is due to launch on 1 December 2015?.

Key points on the Help to Buy ISA

  • New accounts will be available for four years, but once you have opened an account there’s no limit on how you long you can save for;
  • Accounts will be available through banks and building societies from Autumn 2015;
  • You can make an initial deposit of £1,000 when you open the account – in addition to normal monthly savings;
  • 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;
  • Accounts are only available to individuals who are 16 and over;
  • The bonus is available to first time buyers purchasing UK properties;
  • Minimum bonus size of £400 per person;
  • Maximum bonus size of £3,000 per person;
  • The bonus will be available on home purchases of up to £450,000 in London and up to £250,000 outside London;
  • The bonus will be paid when you buy your first home;
  • Your conveyancer will be required to apply for the ISA bonus on your behalf through an online portal. You will be required to secure self-declarations of scheme eligibility;
  • The scheme places a cap of £50 plus VAT on the fee that can be charged for this work by your Conveyancer.

 Are you eligible for a Help to Buy ISA?

The scheme has certain eligibility rules and limits which are relevant at the point that a person opens a Help to Buy ISA, saves up through a Help to Buy ISA, qualifies for a government bonus under the Help to Buy ISA; and buys a first home using the government contribution built up through their Help to Buy ISA.

Opening a Help to Buy ISA will, in most ways, be identical to opening a regular ISA under the existing cash ISA rules. A bank or building society will apply their normal account opening processes which include a minimum age of 16 years old and asking for a National Insurance Number. However, there are some additional requirements for Help to Buy ISAs. In particular a Help to Buy ISA:

  • is only available for first time buyers;
  • each first time buyer can only open one Help to Buy ISA during the lifetime of the scheme

For more information about the Help to Buy ISA or any other residential property matters, please contact our Residential Property team on 0161 475 7676.

You can read more about the ISA on the governments website.

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