Help To Buy Isa

[ccc]

"The government won't let it happen" ?

No I don't think they are right. The government will do all they can to stop it happening - but they will fail in the end. Only question is when.

[long time lurking]

Does anyone know if this is only available for new builds, and whether it's also available for someone wanting to buy outright rather than use it as a deposit with a mortgage?

I had a quick skim over the pdf but I didn't spot any mention of this (might have missed it).

Theres nothing definite as the PDF is just the outline of the scheme, but i would say just new builds as they have stated they are working with the "industry" to finalise the details, i would also guess the industry would include the banks so that would be mortgage only i would have thought but this is just my take on it,theoretically it could be a completely different beast by the time its finalised

[stormymonday_2011]

The average UK citizen has a savings pot of about £10,000. Most of that savings money is in the hands of the over 50s whom one assumes are the least likely to be first time buyers. For those under 45 the average savings pot is less than £4000. This suggests there are not many people in a position to stash away £200 towards a house when other living costs are taken into account. One wonders how many will actually have saved £12,000 by 2020.

http://money.aol.co.uk/2014/09/06/brits-leave-saving-until-they-are-over-50/

In my opinion this is a classic political boondoggle that is designed to look generous in the run up to an election but will probably only really be available to a limited subset of the population (i.e. the children of people who already have large savings balances). In fact a subsidy to aid the kids of wealthier Tory voters to buy a house. Undoubtedly it will be scammed in some ways but I doubt it is going to be the long term prop to the housing market that some fear though it may give it a short term propaganda boost.

In a way I have some understanding for the way politicians behave over house prices.. The last government to allow a housing market crash was John Majors Tory Administration in the early 1990s. Their reward was to be turned from office in a Labour landslide General Election victory in 1997. The Conservatives then endured 13 years out of government while Gordon Brown allowed another housing bubble to emerge and Labour won two more General Elections on the trot. The truth is that no matter how many people complain about the insanity of the UK housing market it appears a great deal more have been prepared to vote to keep the ponzi going. Since politicians ultimately only exist to get elected it is hardly surprising that they do what the punters so evidently appear to have wanted down the past 20 years.

Edited March 21, 2015 by stormymonday_2011

[winkie]

This is nothing about helping to buy.....more like helping to rent from a lender and subsidising a builder/seller....if you can't secure a deposit out of an average wage living in an average place everything else is to help everyone else....taking on a greater risk, with less flexibility, a longer term commitment with a greater tie to a place and or a place of work.....you collect your 'free' money you take your chance and pay the price.

If it looks too good to be true it proberly is.

[stormymonday_2011]

This is nothing about helping to buy.....more like helping to rent from a lender and subsidising a builder/seller....if you can't secure a deposit out of an average wage living in an average place everything else is to help everyone else....taking on a greater risk, with less flexibility, a longer term commitment with a greater tie to a place and or a place of work.....you collect your 'free' money you take your chance and pay the price.

If it looks too good to be true it proberly is.

Precisely. Prices are too high and wages too low for most people to buy so politicians are tempted to fill the gap to stop the market imploding because they know the effect of such a collapse will be electoral annihilation for the party in power when it occurs. The only real beneficiaries are those already vested in the property market who see their asset prices sustained. The actual first time buyers don't win despite the hand out because ultimately they are being forced to buy an asset whose price is artificially inflated. They would almost certainly have done better if the could have saved in a conventional ISA and then bought at a lower price in a market that was not being propped up with government money which eventually they as taxpayers will have to pay back. Edited March 21, 2015 by stormymonday_2011

[Frugal Git]

Ignoring the (almost certainly awful) reason behind launching it, it will be interesting to see how it's administered....as the budget outline document is pretty thin. Specifically:

1) The doc is clear on the point you only get the bonus when you buy the property, and the scheme is open for the next four years.

Does that mean the property also has to be purchased in/immediately after this time frame? Or does the bonus apply indefinitely (i.e. I can max out the ISA, and leave it accruing at whatever the underlying rate is until a point is reached where I buy - which lets say hypothetically be 20 years away)?

2) Restrictions on type of property that can be purchased (i.e. new builds only?)

3) The basic interest rates offered by institutions with this scheme. Obviously, the sweetener makes this isa better, but I (cynically) can't see institutions offering the same as standard ones.

4) Is this ISA in addition to any standard one you may open in a year? Seeing as you can put in (yourself) a max of 2.4K an annum, that's a lot less than the 15K in another one.

Basically If it's reasonably flexible in all the above regards, I will probably use it anyway and put my morals to one side .The swines owe me a magnitude more than 3K for all their market manipulation anyway!

[winkie]

A cash ISA.....does not have the benefits it used to for normal working people, people who would never earn £1000 PA in piss poor interest rates let alone earn any kind of capital gain...once it was worth having and paid tax free interest often at a higher rate than other savings accounts....now it pays less and hardly worth bothering about, unless in a very few cases required to help in means testing.

This hand you £3k style of ISA will mean you will have to buy a house to get the freebie.....the money only paid via a conveyancer/ solicitor on completion of a first property.

Interest is so poor now, tax paid on nothing is nothing....so nothing is the give away....which means precisely nothing.

[renting til I die]

Ignoring the (almost certainly awful) reason behind launching it, it will be interesting to see how it's administered....as the budget outline document is pretty thin. Specifically:

1) The doc is clear on the point you only get the bonus when you buy the property, and the scheme is open for the next four years.

Does that mean the property also has to be purchased in/immediately after this time frame? Or does the bonus apply indefinitely (i.e. I can max out the ISA, and leave it accruing at whatever the underlying rate is until a point is reached where I buy - which lets say hypothetically be 20 years away)?

2) Restrictions on type of property that can be purchased (i.e. new builds only?)

3) The basic interest rates offered by institutions with this scheme. Obviously, the sweetener makes this isa better, but I (cynically) can't see institutions offering the same as standard ones.

4) Is this ISA in addition to any standard one you may open in a year? Seeing as you can put in (yourself) a max of 2.4K an annum, that's a lot less than the 15K in another one.

Basically If it's reasonably flexible in all the above regards, I will probably use it anyway and put my morals to one side .The swines owe me a magnitude more than 3K for all their market manipulation anyway!

No, you can only open the one cash ISA a year.

3.9 As is currently the case, it will only be possible for a saver to subscribe to one cash ISA per year. It will therefore not be possible for an account holder to subscribe to a Help to Buy: ISA with one provider, and another cash ISA with a different provider. However, first time buyers who have more than £200 to save every month will also be able to benefit from the major changes to the taxation of savings announced in today’s Budget. From April 2016 individuals will benefit from a new Personal Savings Allowance of up to £1,000 for basic rate tax payers, and up to £500 for higher rate taxpayers. Additional rate payers will continue to pay tax on all their savings income.

I couldn't find anything saying that you couldn't open a stocks and shares ISA though.

A cash ISA.....does not have the benefits it used to for normal working people, people who would never earn £1000 PA in piss poor interest rates let alone earn any kind of capital gain...once it was worth having and paid tax free interest often at a higher rate than other savings accounts....now it pays less and hardly worth bothering about, unless in a very few cases required to help in means testing.

This hand you £3k style of ISA will mean you will have to buy a house to get the freebie.....the money only paid via a conveyancer/ solicitor on completion of a first property.

Interest is so poor now, tax paid on nothing is nothing....so nothing is the give away....which means precisely nothing.

Yep, totally agree. ISA's only benefit the very rich now. Which is funny as they were introduced at a low level of saving (wasn't in £3000 a year?), precisely as a savings vehicle for a working class. Seems quite typical of the current government, so no surprise there.

[Frugal Git]

No, you can only open the one cash ISA a year.

I couldn't find anything saying that you couldn't open a stocks and shares ISA though.

Yep, totally agree. ISA's only benefit the very rich now. Which is funny as they were introduced at a low level of saving (wasn't in £3000 a year?), precisely as a savings vehicle for a working class. Seems quite typical of the current government, so no surprise there.

Thank you very much for the info - that makes things a lot clearer, although that's a bit of a shame. Though thanks to the 5K p/a interest without tax now (as was announced last year) for people earning very low incomes (which applies to me, I can actually earn more than 1K in interest on cash via all these fab current accounts despite the low income), as you say the cash ISA is rather pointless anyway.

Next question then is how flexible the flexible ISA is. They have said that you can move money in and out of the wrapper in a given year. So can you take existing (i.e. previous years) cash out on 6th April one year, earn more on it and then stuff it back in before the 5th April following? Again, I can earn a higher rate outside the wrapper, so it would appeal. There doesn't appear to be any reason restricting that, but I imagine they mean only the ISA allowance for the year we are in.

[long time lurking]

Thank you very much for the info - that makes things a lot clearer, although that's a bit of a shame. Though thanks to the 5K p/a interest without tax now (as was announced last year) for people earning very low incomes (which applies to me, I can actually earn more than 1K in interest on cash via all these fab current accounts despite the low income), as you say the cash ISA is rather pointless anyway.

Next question then is how flexible the flexible ISA is. They have said that you can move money in and out of the wrapper in a given year. So can you take existing (i.e. previous years) cash out on 6th April one year, earn more on it and then stuff it back in before the 5th April following? Again, I can earn a higher rate outside the wrapper, so it would appeal. There doesn't appear to be any reason restricting that, but I imagine they mean only the ISA allowance for the year we are in.

As per the PDF i would say yes as there is no limit mentioned in connection with withdrawals/return of money ,but the PDF is only the outline of the scheme so i would expect a hell of alot of small print in the finalised version and this may change

[RandomFactor]

Theres nothing definite as the PDF is just the outline of the scheme, but i would say just new builds as they have stated they are working with the "industry" to finalise the details, i would also guess the industry would include the banks so that would be mortgage only i would have thought but this is just my take on it,theoretically it could be a completely different beast by the time its finalised

Thanks. I suspected as much. It seems all these schemes are geared towards people taking on massive debts so you're probably right and this will turn out to be another one.

[pig]

Actually does this scheme make a sort of perverse sense ? Bear with me here.

The previous help to buy put the taxpayer on the hook for 20% of the house cost. Assuming you've properly worked through the consequences of this policy (!) then a proportion of defaulting, the taxpayer definitely losing money, must have been worked out ?

If you are happy with the taxpayer losing money in this way, then its just a tiny step to having the taxpayer simply paying a percentage point or so for peoples houses ?

[long time lurking]

Actually does this scheme make a sort of perverse sense ? Bear with me here.

The previous help to buy put the taxpayer on the hook for 20% of the house cost. Assuming you've properly worked through the consequences of this policy (!) then a proportion of defaulting, the taxpayer definitely losing money, must have been worked out ?

If you are happy with the taxpayer losing money in this way, then its just a tiny step to having the taxpayer simply paying a percentage point or so for peoples houses ?

Will this scheme be a replacement of the old one ,it`s being presented as an expansion of HTB

If it is a replacement it would be a better deal in it`s current form with a big emphasis on current form ,it dose not require much of and imagination to envisage the carrot dangling from the stick getting ever closer and ever larger

[pig]

Will this scheme be a replacement of the old one ,it`s being presented as an expansion of HTB

If it is a replacement it would be a better deal in it`s current form with a big emphasis on current form ,it dose not require much of and imagination to envisage the carrot dangling from the stick getting ever closer and ever larger

Yes, but I should also stress, the taxpayer being on the hook for the thousands, perhaps in the end hundreds of thousands of 20% deposits is more of an incentive for the government to keep on inflating housing than this manifestation, even though perhaps the 'principle' of the thing stinks more.

[Guest_growlers_*]

http://www.independent.co.uk/news/uk/home-news/help-to-buy-scheme-is-inflating-house-prices-10124042.html

Good to see this fact starting to be accepted.

[Ash4781]

I suspect they wanted to cut stamp duty land tax for first time buyers. However, tinkering again would suggest that the stamp duty land tax changes from Dec'14 did not work as expected. I know the OBR have looked at transaction volumes. They notr it is Mortgage Market Review (MMR) that has a larger effect than expected.

The transactions going through are also a higher proportion of 'cash only' or that is how they appear in UK.

Edited March 22, 2015 by Ash4781

[Assume The Opposite]

Nationwide already offers HTB ISA's @ 2%..

[Guest_northshore_*]

Does it make clear anywhere whether it's one per person, or one per person per year?

[Guest_growlers_*]

http://theconversation.com/help-to-buy-isas-will-end-up-feathering-nests-of-the-wealthy-heres-how-39031

[TheCountOfNowhere]

I'm not joking, I have seen a couple of places put their asking price up 6K this week....whilst 20-40% of everyone else is knocking £10K-£100K off.

[thom123]

I...

3) The basic interest rates offered by institutions with this scheme. Obviously, the sweetener makes this isa better, but I (cynically) can't see institutions offering the same as standard ones.

...

I can imagine the rates offered by the providers being (relatively) generous as it'll be a marketing tool for attracting people to hawk a mortgage to.

[FreeTrader]

Guardian: Labour would use help-to-buy ISAs to build 125,000 homes over 5 years

In a speech on Saturday to more than 1,000 party supporters in Warrington, Miliband will say: “There’s no bigger symbol that our country doesn’t work for working people than young people not being able to get a start with a home of their own.

“We’re going to turn it round and build the kind of country in which we can all be proud. Investing in our future, investing in the next generation, giving hope back to young people and restoring the promise of Britain.”

Miliband is to propose that a Labour government would use the new help-to-buy Isa, announced by George Osborne in his budget last month, to create a £5bn future homes fund. This will allow an extra 125,000 homes to be built by 2020.

Banks and building societies that offer the Isas would be obliged to invest the funds in housebuilding. The government would underwrite every pound of the investment. But Labour would maintain the most attractive element of the chancellor’s scheme designed to attract first-time buyers – a £50 government top-up for every £200 invested in the Isas.

The Labour leader will say that his plan will tackle the central flaw in the Osborne scheme – that it stimulates demand for housing while doing nothing to increase supply.

Labour says the government has spent £6.6bn on schemes to stoke housing demand while neglecting housebuilding. The new fund would aim to “pump prime” supply after figures showed that the gap between supply and demand is on course to reach 2m homes by 2020. This will lead to an increase in the cost of an average home by £78,000 to £363,000.

Miliband regards the announcement as one of his most significant initiatives of the campaign as he aims to ensure that a Labour government transforms the rate of housebuilding, which has reached its lowest level since the 1920s. He believes it shows that Labour can adapt consumer-friendly measures to promote what he regards as progressive goals.

The scheme will be focused on housing growth areas, special new sites where local first-time buyers are given priority. Labour, which has pledged to ensure that 200,000 new homes a year are built by 2020, has already announced plans to force developers to build on land they own. Local authorities will be given powers to enforce a “use it or lose it” approach. A new generation of garden cities will be created to provide more than half a million homes.

Miliband will launch a scathing attack on the coalition for a negligent approach to housebuilding. The Labour leader will say: “Home ownership is now at its lowest level in 30 years. People are getting older and older before they can afford to buy their first home. There are now 11 million people who rent their homes, most of whom say they would like to buy. There are almost three and a half million young adults living with their parents – an increase of half a million in the last five years alone.

“So much of this is because the number of houses being built just isn’t keeping up with demand. Average house prices are now eight times the average wage.”

[renting til I die]

http://www.moneysavingexpert.com/savings/help-to-buy-ISA?utm_source=MSE_Newsletter&utm_medium=hiya&utm_term=25-Mar-15-v3&utm_campaign=savings&utm_content=9

Answers to pretty much any question you can think of! (apart from 'is this a sign of the top of the market!' )

I also notice that it doesn't have a maximum age.

[moedo12]

I can't help but wonder whether this might have a slight effect of reducing demand and therefore prices as people wait for their ISA to mature?

I just can't see many people wanting to wait 5 years though just to get three thousand quid though.

[Ash4781]

The shadow housing minister is on BBC breakfast discussing htb ISA (see Freetraders post). She isn't doing too well. Still the policy must have been cobbled together between the March budget and today.