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

BobT36

Yup, which is cutting it in some regions now. 

Better than £250k though which is nothing now! lol. Remember FTBs are much older now, too. 

[Deleted User]

p00hsticks said:

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'....

New 2 bed terrace houses are well over the cap around here. They aren't fit for human habitation either, well below minimum size standards.

A studio flat is all you can get under the limit, and a wrecked one at that. With the cladding problems and buy-to-let, those are in short supply.

anselld

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?

The buyer can still use the funds and interest, they just lose the gov bonus.  Max gov bonus is £3000.  So offer to reduce selling price by £3000 instead.

Exodi

anselld said:

The buyer can still use the funds and interest, they just lose the gov bonus.  Max gov bonus is £3000.  So offer to reduce selling price by £3000 instead.

Why should the seller reduce the selling price because the buyer wants to use a HTB ISA?

As you say, the bonus is up to £3,000, assuming you hold the full £12,000 in it, which takes a minimum of 5 years at maximum contributions, most will probably have less. Realistically the average person has less than that, so we're probably talking 1-2 grand.

The fact the buyers "cant offer anything over £250k" on a £270k house, because they might forfeit a 1-2 grand bonus, is laughable. Fully appreciate it's unfair on them also, but it's not the OP's fault. I had to forfeit the bonus also (and I wouldn't have dreamed of asking the seller drop the price to cater for me).

[Deleted User]

It's probably some miscommunication with the agent. Maybe the house really is worth £250k in their eyes, but the agent is making excuses because they don't want to tell the vendor that they over-valued it and the market is falling.

BobT36

Exodi said:

anselld said:

The buyer can still use the funds and interest, they just lose the gov bonus.  Max gov bonus is £3000.  So offer to reduce selling price by £3000 instead.

As you say, the bonus is up to £3,000, assuming you hold the full £12,000 in it, which takes a minimum of 5 years at maximum contributions, most will probably have less. Realistically the average person has less than that, so we're probably talking 1-2 grand.

You're forgetting that a couple can both use their ISAs and claim the bonus, so that's actually £6k, a fair chunk, that would (indirectly) cover the survey and solicitor fees etc etc. 
Both me and the GF have had ours filled with £12k for a good while, so it's certainly possible. But of course we're both in our mid-late thirties now so hardly looking at a 2-bed terrace. We did everything "right", diligently saving, pouring money into the scheme every month etc, but of course the govt didn't do their bit and have it keep up with the house prices. 

Useless citing data going right back to 2015, which they did: 
"Since the scheme launched in 2015, 480,494 property completions have been supported through the scheme with a mean property value of £175,849 compared to an average first-time buyer house price of £228,627".

Great, and how does that help me, today, with last January an average house price in England (exc London) of £310,000 and an average FTB age of 34 (as of last year). 

Gavin83

I really don’t understand why people still use a Help to Buy ISA. The LISA is a better product in almost every way. I get the time constraints but it’s not like the LISA is a new product, it’s been out for what, 6 years? Like most things in life it’s best not to leave decisions to the last minute.

You can write to the Government but they’re unlikely to change the scheme so you really need to plan for what the best option is for you.

GDB2222

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?

Of course, you can sell the curtains separately from the house. As others have said, the price needs to be realistic, though - say half of new price, if they are not too old. Likewise, you can sell the appliances at a realistic price. 

BobT36

Gavin83 said:

I really don’t understand why people still use a Help to Buy ISA. The LISA is a better product in almost every way. I get the time constraints but it’s not like the LISA is a new product, it’s been out for what, 6 years? Like most things in life it’s best not to leave decisions to the last minute.

You can write to the Government but they’re unlikely to change the scheme so you really need to plan for what the best option is for you.

It's been out for six years but it's only recently the cap has been blown out of the water. I don't think many would have expected prices to go quite as silly as they have.. 

The LISA also requires some BIG thinking before moving into it since the money is essentially locked in. (Unless want to suffer penalties). 

Schwarzwald

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?

Besides the legal aspects that this is borderline, but probably more an issue for the buyer than for you when you, for example, sold them the house for 250k and your old Vauxhall that is parked in the drive for £20k … the likely practical issue arises in the fact that they dont get mortgage against the £20k so likely would need to fully equity finance that portion which … might be difficult for them if they are already facing other financial challenges as described