Are there any ways around the £250,000 price cap for those with a help to buy ISA?

adzy77

We have a property for sale for £270,000 and have had a couple of viewings from first time buyers who are using a help to buy ISA, meaning that they cant offer anything over £250k which is too low for us to accept.

If we were to agree on a price in between at say 260, could we ‘sell’ our curtains or something to make up the £10k difference (assuming they had the cash) as part of the conveyancing process? Are there any other ways people get round it?

MattMattMattUK

adzy77 said:

We have a property for sale for £270,000 and have had a couple of viewings from first time buyers who are using a help to buy ISA, meaning that they cant offer anything over £250k which is too low for us to accept.

If we were to agree on a price in between at say 260, could we ‘sell’ our curtains or something to make up the £10k difference (assuming they had the cash) as part of the conveyancing process? Are there any other ways people get round it?

There is no way around it in the terms and conditions and it could be argued that selling curtains for £10k to bypass the rules of a financial scheme and stamp duty would be fraud. 

Ultimately I would say it means that if you want a price greater than £250k you need different buyers. Is £260-270k actually realistic for the property based on what is selling (not just listed) in your area at the moment? 

SadieO

As MattMattMattUK suggests, it's fraud. Not sure who would check this but if anyone did there's no way anyone would belive that some second hand curtains are legitimately worth £10k. Especially when that coincidentally reduces the purchase price to exactly the amount needed to get the ISA bonus. 

[Deleted User]

Help to Buy is pretty useless because of that cap. Presumably if you are getting offers from FTBs the property has some issue that is deterring the usual buy-to-let lowlifes and people looking to move up the ladder, i.e. it is too big and not suitable for dividing into flats. Maybe look at that.

Exodi

As others have said, I don't think anyone from MSE can (or should) be helping you with what is effectively fraud.

Even if you did decide to push ahead agree with a pretend purchase price of £250k, accompanied with a private deal of £10k, your buyer isn't going to be keen to give you the money before exchange/completion and they'll likewise be aware that it would be impossible enforce the agreement after. Obviously no court will help.

On the other hand, I agree with rigolith that nowadays HTB ISA's are useless in most cases.

They were introduced in Dec 2015 and were available for purchases up to £250,000 (£450,000 in London).

According to the ONS, the average UK house price was £204,920.

By the same source, house prices in March 2023 (unfortunately the most up-to-date data published) has house prices at £285,000, representing an impressive ~40% increase over the past 7.5 years.

In the same time, the HTB ISA has changed by an equally impressive 0%.

I had a HTB ISA open for a few years before I eventually looked into buying my first house about 5 years ago. When I started viewing, it quickly became apparent that unless I was willing to move into a 2 bed terraced ex-council property, I'd have to forfeit the bonus (which I did).

That said, I am glad they are phasing it out. Despite being a home-owner, it has always felt strange to use taxpayer money to effectively subsidize house prices.

BobT36

Annoying, isn't it. 
I've had one for years, filled it to the max (along with my GF's) and now can't use it as any decent property (even in the north!) is well over that. Average age of FTBs (like me) is now around 34-35 too, so hardly people looking for a small 1-2 bed terrace. 

I've messaged the govt multiple times and the idiots just keep responding with the fact their LISA exists (no use for people looking to buy imminently rather than 3 years later...) and that the median house cost since it started in 2015 was £180k. Great. It's now NOT that value is it, it's now 2023.. 

So many like me are still sat with them all filled up (as advised by the govt) and unable to use it, grr. 

[Deleted User]

LISA is useless too, can't open one after age 40.

BobT36

[Deleted User] said:

LISA is useless too, can't open one after age 40.

Or take money out in an emergency. 
And it takes branching three tax years to move the H2Buy ISA amount over and fill it..

Of course the govt departments completely ignored this, just quoting the LISA exists and the benefits of it, etc etc. 

I asked them to consider raising the H2Buy ISA cap, and/or allow transfer of the full amount in to a LISA, if coming from a H2Buy ISA. Even then though you'd have to wait a year before you buy. No good if looking for somewhere imminently. 
Really irritating following the guidance, doing the right thing and saving for all those years, then not being able to use it.. 

JacJac1

BobT36 said:

[Deleted User] said:

LISA is useless too, can't open one after age 40.

Or take money out in an emergency. 
And it takes branching three tax years to move the H2Buy ISA amount over and fill it..

Of course the govt departments completely ignored this, just quoting the LISA exists and the benefits of it, etc etc. 

I asked them to consider raising the H2Buy ISA cap, and/or allow transfer of the full amount in to a LISA, if coming from a H2Buy ISA. Even then though you'd have to wait a year before you buy. No good if looking for somewhere imminently. 
Really irritating following the guidance, doing the right thing and saving for all those years, then not being able to use it.. 

Yes the LISA is not all it cracked up to be, despite the government bonus. I opened one 6 years ago and dilligently saved, but of course house prices have gone up massively. I would've laughed back then if you had told me that the London cap might be an issue, but here we are.

se2020

LISA is also capped at 450k

p00hsticks

BobT36 said:

Annoying, isn't it. 
I've had one for years, filled it to the max (along with my GF's) and now can't use it as any decent property (even in the north!) is well over that. Average age of FTBs (like me) is now around 34-35 too, so hardly people looking for a small 1-2 bed terrace. 

And that's part of the problem - in the 'olden days' FTBs were expected to start with a small 1-2 bed terrace and gradually work up the ladder towards a 'decent property'....