Help to Buy isa

DeniseHutchins

I am using the help to buy Isa for my first house purchase and made a mistake of withdrawing the money to pay the deposit and then going into the bank to close the account the next day. It now appears I cannot get the bonus. Can anyone help? Urgently

MarkCarnage

Presumably the bank can help? However, reading the account terms and conditions might be a start,....

masonic

I don't think anything can be done in this instance. Money that's been withdrawn cannot simply be replaced in a HTB ISA and the bonus is only payable on the closing balance of the account.

eskbanker

Unfortunately the HTB ISA scheme rules are quite explicit about the consequences of doing this:

6.9 Effect of withdrawing funds from a Help to Buy: ISA

(A) If a Help to Buy: ISA Holder withdraws all of the funds in their Help to Buy: ISA otherwise than in a manner as described in clause 6.7 (Closing a Help to Buy: ISA – Closing Documents), from that time onwards, the Help to Buy: ISA Holder shall not be entitled to claim a Bonus in respect of such funds.

There is a potential glimmer of hope in that the next sub-clause indicates that the institution must warn the saver:

(B) Each Eligible ISA Manager shall take reasonable steps to warn a Help to Buy: ISA Holder of the consequences of a withdrawal of the kind described in paragraph (A) above, in accordance with the requirements set out in the Help to Buy: ISA Manager Guidelines.

but I'm not sure exactly what that last document is. Maybe worth trying to make a case to your bank that they should have questioned a total withdrawal without closure, given the irreversible impact of doing so?

Rich2808

Another sad consequence of a ridiculously confusing and bureaucratic product designed by civil servants it seems for a section of society less likely to understand the house buying process (i.e. first time buyers).

Why only a £200 a month deposit allowed after £1,200 in one month - so it takes nearly 5 years saving to be able to claim the maximum £3k bonus

Why do you need to take out a mortgage - why aren't cash buyers eligible (e.g. is someone buying a £450k flat with a mortgage in London really more deserving of help than someone buying a £25k flat in Doncaster) - is the scheme to help banks or buyers make money?

Why a £450k house price limit in London boroughs but only £250k elsewhere - even though properties in much of the south east are more expensive than some London boroughs like Barking and Dagenham?

Why are solicitors even involved - surely it could have been managed through banks/building societies with them drawing down bonuses on mortgage completion and crediting them to the mortgage account - just so the solicitors can claim their £50 and potentially mess it up (or aren't registered so the buyer can't claim anyway)?

Why can't the funds be used as a deposit - rather than at completion?

And so many ill informed staff at providers - that don't understand the process and don't advise customers of the consequence of their decisions (as has applied to the OP it seems). Surely staff should be prompted on their systems i.e. if you withdraw the cash in this way from a HTB isa you won't be able to claim the bonus.

So many possibilities for things to go wrong in the process due to the complexity of the scheme! I feel awful for the OP - who may have missed out on thousands of pounds after several years worth of working and saving for a simple but seemingly irreversible mistake due to idiotic rules created by Treasury civil servants and ill informed staff at banks and building socieities!

eskbanker

You missed out:

Why go on an extended rant about a product that will reach the end of its four-year active/promoted life in a couple of weeks time? They're hardly going to change the fundamentals now, even though there's obviously still a long time before it finally winds down....

Having said that, I agree with your last couple of paragraphs, although suspect that OP wouldn't have withdrawn the funds in branch, based on "withdrawing the money to pay the deposit and then going into the bank to close the account the next day", so the warning here would probably have needed to take the form of an alert box on the website.

Rich2808

The government can chose to amend the scheme at any time if if wishes via secondary legislation.

The opportunity to open accounts may end this month but people have up to another 11 years to claim the full bonus.

Sorry if it seemed like a rant but it could have been made a whole lot simpler and it can still be altered very easily to avoid some of the current issues.

eskbanker

Rich2808 wrote: »

The government can chose to amend the scheme at any time if if wishes via secondary legislation.

The opportunity to open accounts may end this month but people have up to another 11 years to claim the full bonus.

Sorry if it seemed like a rant but it could have been made a whole lot simpler and it can still be altered very easily to avoid some of the current issues.

Yes, of course the government could change the scheme, but my point is why would they - the 'issues' you describe are all factors that would have been known about and taken into consideration when the rules were originally drawn up in 2015, so it's not as if these are insightful learnings gleaned from the scheme's first few years of operation.

There is perhaps an argument that the property price caps might be reviewed at some point in the (long term) future, but a simple two-tier pricing model will always disadvantage some parts of the country more than others, until or unless the scheme is made significantly more complex in the name of perceived fairness....

linkliter

Rich2808 wrote: »

Why do you need to take out a mortgage - why aren't cash buyers eligible (e.g. is someone buying a £450k flat with a mortgage in London really more deserving of help than someone buying a £25k flat in Doncaster) - is the scheme to help banks or buyers make money?

I've wondered whether cash buyers would be eligible, I take it from the above, that they are not.
I've not seen this particular point mentioned, even on Martin's show.
I would be grateful if you could point me in the right direction to clarify this point.
Even though cash buyers do not qualify for the bonus do they still receive the higher interest from the bank/building society?

eskbanker

linkliter wrote: »

I've wondered whether cash buyers would be eligible, I take it from the above, that they are not.
I've not seen this particular point mentioned, even on Martin's show.
I would be grateful if you could point me in the right direction to clarify this point.
Even though cash buyers do not qualify for the bonus do they still receive the higher interest from the bank/building society?

The assumption is that those with enough funds to buy a property outright won't need taxpayer assistance - https://www.helptobuy.gov.uk/help-to-buy-isa/faq/#b39a24ea-e1f7-648f-8ce9-ff0000ad17aa clarifies:

Can I buy a property without a mortgage and be eligible for a government bonus?

No. The property you are buying must be mortgaged in order to be eligible for the government bonus.

I haven't seen ML's TV show but he can't be expected to offer a comprehensive guide to all aspects of schemes like this in that sort of environment, so anyone looking to take out a financial product still needs to do their own research elsewhere, such as https://www.moneysavingexpert.com/savings/help-to-buy-ISA/ and product Ts & Cs.