Help to Buy ISA scheme - the ins and out

On 1 December 2015 the next assault on the housing market commences with the launch of the Help to Buy ISA scheme, basically the Government will give you a cash boost towards buying your first home if you save into a new type of ISA. How exciting. Under the scheme you save up to £200 a month and the Government add 25% on top – so if you save the full amount you get a further £50 – and in your first month you could save up to £1,200 therefore getting a bonus of £300. Compared to your average ISA you certainly are getting a bonus!







For once I like the plan, it should work and give first time buyers a good boost in life but in reality, with the maximum being £3,000 from the Government (therefore £12,000 from you!) it’s hardly going to cover all the first deposit so it provides some relief but doesn’t go the extra way to help reach the deposit levels required. However looking at it a different way, you are effectively getting your tax back on the money you put into savings, so that is a real incentive and surely as a couple you could both do it therefore giving you a rather chunky amount to put towards that first house.







But taking a step back why is the above needed? Well because first time buyers can’t afford the deposit! Interesting that at the same time the listed housebuilders continue to report a strong year with the residential house building sector outperforming equities in other sectors for Q3 2015. Building carried out research which shows the sector rose 3% in Q3 and 59% year on year – imagine investing in that! Certainly would help towards the deposit for a first time buyer.

  

There is however no point in pointing the finger, after all they are businesses that have to answer to their shareholders. The shareholders are likely to include your pension fund so it’s in your interest that their performance continues. In truth it’s one big circle! Since the lows of 2008 the share price has grown exponentially with the housebuilders now worth around £30bn – they do contribute a lot to the economy though from an employment perspective (which therefore means taxes!). The average housebuilder builds around 7,000 units a year and has a landbank to see them through a good few years – that is a good strong economical thumbs up for job security of thousands.

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

Enjoy the weekend

Lee