Help to Buy ISA - £250,000 limit

DragonQ

Why exactly does this ISA have such a low limit for the value of the property it can be used with? My partner and I are going to be looking to buy in the next year or two but the chances of us finding a 2 bedroom place in the south east of England for under £250k are next to nil. A new 2 bedroom build near us has a guide price of £450k! Even the cheapest, smallest properties that are nowhere near the town centre, in the dodgiest locations, and sit on top of train lines are only just under the £250k limit.

Has the government done this on purpose to prevent too many people, particularly in the south east, from using the scheme? It seems crazy that only properties in London get the higher limit of £450k. Even a small increase of the limit to, say, £300k would make it much more viable.

MARTYM8`

This scheme is meant to help first time buyers who are struggling to buy a first home. Not people who can afford to spend £450k on their first property - unless they are Londoners!

If the taxpayer is going to dole out £3,000 to people pay for someone to buy a home then its only right that it goes to those buying properties which are below the average house price. It really shouldn’t be going to people who can afford to pay £450,000 for a home. Clearly London is an anomaly – so if you want to benefit from the help to buy isa and can afford to pay £450,000 for a property (implying an income of £100k+ on a 4 times salary mortgage) then move there.

150,000 frail elderly people have stopped receiving council social care in England due to spending cuts since 2010 – maybe the billions being spent on the help to buy ISA could be better used? Just my opinion!

DragonQ

The problem is that the average price of a house where I live is nearly £450k anyway, so even £300k would be well below that, let alone £250k.

MARTYM8`

DragonQ wrote: »

The problem is that the average price of a house where I live is nearly £450k anyway, so even £300k would be well below that, let alone £250k.

I realise the problem and appreciate the situation you are in. But what was the price of that £450k average house in 2010? Government policy has been to promote higher house prices since 2012 – hence the rocketing values in some areas like London and the south east.

Far from helping FTB’s- they have just priced them out even more!

And in any case the maximum £3k you can receive under the help to buy isa – and you only get the £3k top up if you save the maximum for 5 years – isn’t really going to make any difference as to whether you will be able to afford a £450k property or not as a first time buyer.

If you believe the speculation – and it may be rubbish – the government expects house prices in London and the south east to rise by 25% plus. So by 2020 that £3k will be worth even less in terms of its property purchasing power.

PS Do they have any shared ownership schemes in your area – not a great fan but that may be the only way you will get to live in a house worth £450k even if you may only own half of it.

DragonQ

I'm not interested in buying a £450k house as a first time buyer though, that isn't realistic. It's just annoying that £250k isn't enough. My partner and I are both professionals with well paying jobs, yet we can only just borrow enough to buy a house at the low end of the market with a hefty deposit.

£3000 may not sound like a lot in the scheme of a £300k house or whatever, but that's probably a year's worth of savings. As they say, every little helps.

jimjames

DragonQ wrote: »

The problem is that the average price of a house where I live is nearly £450k anyway, so even £300k would be well below that, let alone £250k.

There are still plenty of houses in the South East that are well under £250k. Unfortunately they need to set a limit somewhere and £250k elsewhere will buy a pretty decent pad for a first timer.

pjread

Most first time buyers aren't necessarily buying the only house they'll ever need either. You need to compromise sometimes sadly, but I'm sure plenty are less well off.

Zoopla reckons my 3 bed house in the SE is worth just shy of 250k BTW, but then I do have a 5hr round commute to show for it...

DragonQ

jimjames wrote: »

There are still plenty of houses in the South East that are well under £250k. Unfortunately they need to set a limit somewhere and £250k elsewhere will buy a pretty decent pad for a first timer.

Why does there need to be a limit at all? There's already a limit to how much money you can get regardless (£3000, which'd take at least 2.3 years or something to accumulate). I mean I can kind of understand that giving £3000 to someone buying a £1m house is a bit silly but they'd still have had to use a Help To Buy ISA for 2.3+ years to get that bonus. Most people who can afford such a property seem unlikely to wait that length of time for a small sum relative to what they already have.

Archi_Bald

DragonQ wrote: »

Why does there need to be a limit at all?

I am guessing but I suspect the offer is aimed at first time buyers that need help. Anyone who can afford to pay more than £250K/£450K for their very first patch can't be terribly hard up and can't really expect help from other taxpayers, particularly not whilst the country is still as indebted as it is at present.

jimjames

DragonQ wrote: »

Why does there need to be a limit at all? There's already a limit to how much money you can get regardless (£3000, which'd take at least 2.3 years or something to accumulate). I mean I can kind of understand that giving £3000 to someone buying a £1m house is a bit silly but they'd still have had to use a Help To Buy ISA for 2.3+ years to get that bonus. Most people who can afford such a property seem unlikely to wait that length of time for a small sum relative to what they already have.

The more the house value the less significant the HTB ISA amount will be in comparison. If you can afford a house at £1m then £3000 is pretty small amount and as there is a limited budget it seems better to concentrate the funds on those who benefit most.

norm_

I think we can all agree this scheme wasn't a well considered effort by the Conservatives to fix the housing crisis, merely a token offering and a way to generate some PR before the election.

The real answer is building more homes, but that goes against the Conservative ethos entirely because it would bring down house prices and in turn they lose money.