The Help to Buy ISA (HTB ISA) which was introduced in December 2015 as a means of supporting first-time buyers to take their first step on to the property ladder is changing. Here, Laurie Carruthers, one of FBC Manby Bowdler’s Residential Conveyancing Solicitors, explains the implications of these changes.
The Help to Buy ISA is a scheme whereby the Government adds 25% to the savings of first-time buyers, up to a maximum of £3000 on savings of £12000. To date, it has supported somewhere in the region of a quarter of a million people to become homeowners, however, from 30 November 2019, it will no longer be available to new savers. What that means is that any prospective purchasers looking to benefit from this scheme need to act quickly.
The good news is that opening a HTB ISA is a very straight forward process and many of the well-known banks and building societies provide them so there’s still time to take advantage before the deadline. What you’ll need to consider before doing so, though, is your eligibility for the scheme. The headline details to remember are that HTB ISAs are available to individuals who haven’t previously purchased their own property and where a couple is purchasing a home together, each party can open their own HTB ISA and, therefore, both claim the government bonus.
You’ll only need £1 to open the account and in the first month up to £1200 can be saved. The maximum amount deposited each month thereafter is capped at £200 and once you’re in a position to purchase a property, the government will provide a 25% boost to those savings (up to £3000). While the scheme is coming to an end on 30 November this year for new savers, if you’ve opened the account before then, you’ll have until 1 December 2030 to claim your government top-up with payment being made once your property transaction is confirmed. The ease of the scheme is such that at this point, your solicitor or conveyancer will claim on your behalf between the point of contracts being exchanged and legal completion.
If for any reason you require the government bonus to make up the deposit on exchange of contracts, then your solicitor will advise you on your options. In this instance your solicitor or conveyancer would look to agree a smaller deposit at exchange with the seller; with the promise of the government bonus to follow as part of the overall deposit.
Another important factor to remember is that in order to claim the government bonus, your conveyancer will need a closing statement from your HTB ISA account. What this means is that you’ll need to withdraw your funds and close your account, ensuring you receive a closing statement from your ISA manager. If you simply withdraw all of your money, you won’t receive the closing statement and will consequently miss out on the ability to claim your bonus.
The team at FBC Manby Bowdler has supported many first-time buyers to utilise this scheme and help with the purchase of their homes and for those still wishing to do so, can provide the necessary guidance to ensure that the correct steps are taken before the 30 November cut-off date.