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Help To Buy Isa Scandal: 500,000 First-Time Buyers Told Scheme Cannot Be Used For Initial Deposit On Homes

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The Governments much vaunted Help to Buy Isa was on Friday described as a scandal after it emerged that first-time buyers will not be able to use it for an initial deposit on their new home.

More than 500,000 savers have opened the accounts after being told by George Osborne, the former chancellor, that it provided direct government support for those saving for a deposit, as a way of getting Generation Rent on to the housing ladder.

But on Friday it emerged that a flaw in the scheme means a 25 per cent government bonus on savings will not be paid out until the sale has completed.

Experts say this renders the scheme technically useless as it is designed for those who are struggling to find the initial outlay involved in buying a home and means they will still be reliant on loans from their parents, if available.

...

The Treasury has been forced to admit that the clause was included to stop people benefiting from the bonus without actually buying a house.

[more...]

http://www.telegraph.co.uk/news/2016/08/19/help-to-buy-isa-scandal-500000-first-time-buyers-told-scheme-can/

Oh dear.

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Basically makes it utterly useless then ..I have one of these accounts if it wasn't for the okish saving rate I'd be closing is now

Utterly pathetic

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This seems to be completely misunderstood. I'm not sure that is really a scandal or has gone sour.

1) Help to Buy ISA is not meant to help. It was intended to be an eye-catching policy to appeal to people too stupid to realise that it harms those struggling to afford to buy.

2) It is way of allowing people who could afford to be FTBs (without government "help"), or their parents, to get a top-up from the government. Anyone who is struggling to buy will not be helped by the policy. It's just a nice bonus for anyone who could buy and was going to buy anyway.

3) If you are buying you will want a few grand for after you move in to buy furniture, appliances, do repairs, re-decorate etc. And you don't need this money prior to completion. So getting the 25% boost from the government after completion is probably fine.

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That sucks. I got one purely to boost my intial deposit especially as all the savings rates are poor. Combined with no starter homes being built it completely stinks.

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Can someone explain when exactly this HMRC 25% "bonus" kicks in?

After completion, but taken into account by the mortgage lender so the outstanding balance is reduced accordingly?

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The fact it was for a really small portion of the deposit rendered it ineffectual.

So even though it was there to help support high prices it couldn't even do that, can't say I'm surprised.

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...saved by the bell ..take your money and run ...assets in property investment are not the way forward in August 2016......but sue them anyway for encouraging you to 'invest '..........the ladder is now a snake ...you slip down....... :rolleyes:

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It's not a scandal - you get the cash at completion. Either it can go towards the final payment or your solicitor can pay you the bonus.

What is important though is that you pick a solicitor who is registered for the scheme. Many FTBs don't find out until too late that their solicitor isn't and they cannot claim the bonus.

Another one of Osbornes idiotic schemes though with unnecessarily confusing rules.

You must take out a mortgage - cash buyers are ineligible

You can buy a £450k flat in London and claim the bonus but only £250k elsewhere

Your solicitor must claim the cash and can charge £70 to make a simple online claim - so some of the bonus will go to your solicitor in fees.

Your solicitor must be on the approved list to claim the bonus

Why not let your mortgage lender claim it and pay it into your mortgage account to reduce the mortgage?

Edited by MARTINX9

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I agree, this is the green deal (or whatever it was called) all over again. Arcane rules to limit take up, and provide an easy source of income to a few (often big) providers willing to jump through the necessary loop. It's the modern day equivalent of the signs you used to see in chip chops offering credit to those over 80 who are accompanied by both parents.

Great news to hear that it's one of George's pig in a pokes.

Edited by StainlessSteelCat

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Misselling scandal...

Compensation for everyone who took one out?

The wife and I only took them out for the 4% interest rates...

As noted on here, the timescale involved to build up the pot has taken FTBs out of the market and reduced demand. Will that end?

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So on completion you pay stamp duty, and then some cash comes back as HTB ISA bonus from a claim made prior.

It seems fairly clear to me at the HTB admin' page for conveyancers below but imagine EA's have spun it. I met one Ea who said buyers didn't need surveys. He would get his commission quicker!

https://www.helptobuyisaadmin.org.uk/conveyancers/the-scheme

Edited by Ash4781

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It may actually have the effect of further reducing demand a very small amount as it'll be harder for some people to get an affordable mortgage with a lower deposit. Some of these people may still buy but others may wait longer because of it.

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It may actually have the effect of further reducing demand a very small amount as it'll be harder for some people to get an affordable mortgage with a lower deposit. Some of these people may still buy but others may wait longer because of it.

In reality even if you had saved the maximum possible the most bonus you could get now is about £700 for a single person and £1400 for a couple.

So it's not going to be a determining factor for those buying. It's a nice bonus for those who could afford to anyway.

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In reality even if you had saved the maximum possible the most bonus you could get now is about £700 for a single person and £1400 for a couple.

So it's not going to be a determining factor for those buying. It's a nice bonus for those who could afford to anyway.

Where did you get those figures from? They're incorrect. The maximum bonus is £3000 for one, so £6000 for a couple. To achieve this people would have to save £12,000 or £24,0000 respectively.

Edited by spacedin

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Where did you get those figures from? They're incorrect. The maximum bonus is £3000 for one, so £6000 for a couple. To achieve this people would have to save £12,000 or £24,0000 respectively.

He said "the most bonus you could get now". In order to get that £3000 bonus you need to pay in the £200/mo. for a few years and the scheme is not that old yet, so nobody can get £3000 today with the HTB ISA.

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He said "the most bonus you could get now". In order to get that £3000 bonus you need to pay in the £200/mo. for a few years and the scheme is not that old yet, so nobody can get £3000 today with the HTB ISA.

Apologies, slight oversight there. I doubt anyone would aim to claim the discount at that stage though, regardless of whether they can put it toward a deposit so it's a bit of a moot point.

Edited by spacedin

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19 Aug 2016, 10:00pm MOST READ

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According to the article, the treasury have said that the help to buy ISAs were never intended for deposits.

Unfortunately Osborne didn't get that particular memo.

https://twitter.com/ladyhaja/status/766754497066594304

To think this bloke was tipped to be the future PM. Worst chancellor ever? Eclipsing Brown is an achievement at least.

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It's not a scandal - you get the cash at completion. Either it can go towards the final payment or your solicitor can pay you the bonus.

What is important though is that you pick a solicitor who is registered for the scheme. Many FTBs don't find out until too late that their solicitor isn't and they cannot claim the bonus.

Another one of Osbornes idiotic schemes though with unnecessarily confusing rules.

You must take out a mortgage - cash buyers are ineligible

You can buy a £450k flat in London and claim the bonus but only £250k elsewhere

Your solicitor must claim the cash and can charge £70 to make a simple online claim - so some of the bonus will go to your solicitor in fees.

Your solicitor must be on the approved list to claim the bonus

Why not let your mortgage lender claim it and pay it into your mortgage account to reduce the mortgage?

Apparently help to buy website states it is £50+vat max charge. I'm seeing conveyancers charging £100+vat for this.. Legal?

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