Help to Buy ISA

deedsmcd

Martin mentioned tonight writing to the Chancellor re: limits on Lifetime ISA accounts. I am married and we both have Help to Buy accounts. Unfortunately the limit is 250k on the house you can buy with this account outside London and with the current market this may not feasible as house prices have rocketed! We don't want to miss the bonus and think it's too late to switch to Lifetime ISA as want to buy soon, how could we reach out to Martin to see if he could request the limits could at least be brought in line with the Lifetime ISA, please?

eskbanker

deedsmcd said:

how could we reach out to Martin to see if he could request the limits could at least be brought in line with the Lifetime ISA, please?

Anyone seeking dialogue with Martin Lewis personally would be best advised to go via his social media profiles rather than posting on here.

However, this subject has come up semi-regularly on here and realistically there is practically no chance that an old scheme (that hasn't been available to new customers for several years) will be adjusted to align with its replacement - the obvious time to do so would have been when the LISA was introduced, but there has been no sign of any appetite from the government, even in better economic times than now....

Riverside_Ang

I have the same issue.  It's not an "old scheme" - it can be paid into until November 2029 and the bonus can be claimed until November 2030, so it is an active, current scheme  - the only "old" thing about it is that it is no longer available to new subscribers.
The government should not introduce these enticing schemes if they are not going to maintain them in such a way that they remain a genuinely good deal in the spirit of what was offered & originally intended.  It seems too many young people could have been better off saving their money in a normal cash ISA with a higher interest rate, and many must feel as if they were mis-sold their ISAs.  That should not happen with a government-backed scheme!
I hope MSE will challenge the government to increase the allowed property value on Help-to-Buy as well as LISAs...

eskbanker

Riverside_Ang said:

I have the same issue.  It's not an "old scheme" - it can be paid into until November 2029 and the bonus can be claimed until November 2030, so it is an active, current scheme  - the only "old" thing about it is that it is no longer available to new subscribers.

That's just semantics - it can be both an old scheme and an active current one!

The point remains that it was launched in 2015 (with a finite lifespan to 2029/30 published from the start, together with the cessation of new accounts from 2019) and was largely superseded by the Lifetime ISA.

When LISA was launched in 2017, there were transitional arrangements from HTB for the first year, so anyone who already had an HTB ISA at that stage was able to transfer all their money into the newer product, with its higher property value cap outside London, and obviously anyone starting to save from 2017 could use the LISA instead of HTB, so anyone still using a HTB ISA but wanting to buy a property above £250K has had plenty of opportunity to do something about it before now.

Riverside_Ang said:

I hope MSE will challenge the government to increase the allowed property value on Help-to-Buy as well as LISAs...

https://www.moneysavingexpert.com/content/dam/mse/downloads/MSE-Locked-out-LISA-Jan23.pdf does indeed seek that, albeit in fairly lukewarm terms:

A similar principle of uprating house prices in line with housing inflation could also be applied to the two thresholds set for Help to Buy ISAs.

Uprating Help to Buy ISA limits should be proportionate, in line with the regional £250,000 limit and the £450,000 London threshold.

jugglemummy

I completely understand what you are saying but in the scheme of things these Government schemes were introduced to help those that needed the most help. You have to be an economist to actually keep up to date with all the schemes & benefits available and without being condescending the complexity of these schemes often excludes or alienates those that they are designed to help. A relative of mine is in a similar position in that they have accrued fair savings in a help to buy ISA looking to buy their first property less than £250K (Essex area so probably nearer London prices than anywhere else). At the time the LISAs were introduced they were ready to buy their first property and waiting 12 months (ie switching to a LISA) was not beneficial. Unfortunately, one of the buyers was made redundant and it was another 12moths before they were in a position to buy. In that time house prices have risen by at least 10% and now puts them outside the £250K bracket. It seems so unfair that they have saved hard over the 2 year period and now will get no support from the government.

Neil_Jones

jugglemummy said:

I completely understand what you are saying but in the scheme of things these Government schemes were introduced to help those that needed the most help. You have to be an economist to actually keep up to date with all the schemes & benefits available and without being condescending the complexity of these schemes often excludes or alienates those that they are designed to help. A relative of mine is in a similar position in that they have accrued fair savings in a help to buy ISA looking to buy their first property less than £250K (Essex area so probably nearer London prices than anywhere else). At the time the LISAs were introduced they were ready to buy their first property and waiting 12 months (ie switching to a LISA) was not beneficial. Unfortunately, one of the buyers was made redundant and it was another 12moths before they were in a position to buy. In that time house prices have risen by at least 10% and now puts them outside the £250K bracket. It seems so unfair that they have saved hard over the 2 year period and now will get no support from the government.

Everything is unfair to everybody at some point down the line.

Sometimes its a case of dealing with it.

Riverside_Ang said:

The government should not introduce these enticing schemes if they are not going to maintain them in such a way that they remain a genuinely good deal in the spirit of what was offered & originally intended.  It seems too many young people could have been better off saving their money in a normal cash ISA with a higher interest rate, and many must feel as if they were mis-sold their ISAs.  That should not happen with a government-backed scheme!.

Government introduces lots of things that don't get maintained; they're usually called laws.  Schemes are introduced at a particular point for a reason.  If things change, that doesn't necessarily make the schemes bad; just watered down.  No such thing as a free lunch.

Anyway as to feeling "mis-sold their ISAs" - well at one point the H2B ISAs were the best paying ISAs on the market when everything else fell through the floor, with quite a few of them paying 3-4% when the best "normal" /equivalent Cash ISA was closer to 1%, so if you were able to feed them through that period you'd be quids in.

masonic

jugglemummy said:

I completely understand what you are saying but in the scheme of things these Government schemes were introduced to help those that needed the most help. You have to be an economist to actually keep up to date with all the schemes & benefits available and without being condescending the complexity of these schemes often excludes or alienates those that they are designed to help. A relative of mine is in a similar position in that they have accrued fair savings in a help to buy ISA looking to buy their first property less than £250K (Essex area so probably nearer London prices than anywhere else). At the time the LISAs were introduced they were ready to buy their first property and waiting 12 months (ie switching to a LISA) was not beneficial. Unfortunately, one of the buyers was made redundant and it was another 12moths before they were in a position to buy. In that time house prices have risen by at least 10% and now puts them outside the £250K bracket. It seems so unfair that they have saved hard over the 2 year period and now will get no support from the government.

It's worth remembering that the people these schemes were really designed to help were homeowners and house builders. Those wishing to buy have no choice but to play the game if they can, and while it is no help now, £1 in a LISA when they launched in 2016 would have enabled them to transfer in the full balance of their HTB ISA at any time over that tax year, so they could have used the LISA when they eventually were able to buy, presumably during 2017 or 2018. Shows the importance of sites like MSE, which championed the 'open with £1 to start the clock ticking' mantra from the outset.

At least with a HTB ISA, there is nothing lost if it cannot ultimately be used, unlike the LISA.