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

Altior

Exodi said:

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.

Your calculations are fundamentally flawed, as the UK average house price includes London, which significantly distorts the average. That is why London has a separate (much higher) cap. 

You would need to use two different measures for that kind of benchmark. London average and ex London average.

Averages are distorted anyway, by multi-million pound mansions. A more reasonable test would be the median, and if anyone can afford as a FTB to purchase above the median, they probably don't need taxpayer handouts to get on the first rung of the ladder.

Gavin83

Altior said:

Exodi said:

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.

Your calculations are fundamentally flawed, as the UK average house price includes London, which significantly distorts the average. That is why London has a separate (much higher) cap. 

You would need to use two different measures for that kind of benchmark. London average and ex London average.

Averages are distorted anyway, by multi-million pound mansions. A more reasonable test would be the median, and if anyone can afford as a FTB to purchase above the median, they probably don't need taxpayer handouts to get on the first rung of the ladder.

To be fair there are places outside of London that aren’t far off London prices for housing yet as far as I’m aware are subject to the £250k cap. Some places outside of London you’d struggle to get anything for that.

The last part is a fair argument though. All these help to buy schemes were created for those who need the assistance, not for the well off. You should really be buying flats and small 2 bed terrace housing with these schemes. If you can afford a 3/4 bed detached house then there’s an argument that the scheme really isn’t for you.

However I am I hypocrite. We used the LISA a few years back to buy our current 4 bed 1800sqf detached house. Was just within the £450k limit. As people who earn well above the average salary the scheme likely wasn’t really meant for us but since we qualified we’d have been silly not to use it.

Also to somewhat back up the original point of this thread we would no longer be able to buy the same house using this scheme. 

Exodi

Altior said:

Exodi said:

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.

Your calculations are fundamentally flawed, as the UK average house price includes London, which significantly distorts the average. That is why London has a separate (much higher) cap. 

You would need to use two different measures for that kind of benchmark. London average and ex London average.

Averages are distorted anyway, by multi-million pound mansions. A more reasonable test would be the median, and if anyone can afford as a FTB to purchase above the median, they probably don't need taxpayer handouts to get on the first rung of the ladder.

I must say, this feels like dabbling in pedantry and disagreeing for the sake of it, rather than bringing anything meaningful to the conversation - I'm sure you don't dispute the takeaway that house prices have increased, whereas the ISA threshold has not.

Fortunately the ONS just happens to report on what you're asking (Median house prices for administrative geographies: HPSSA dataset 9):

This is percentage increase compared to Dec-15 to Sep 22 (data only goes this far sadly - hopefully formatting doesn't destroy it):

Name	YE Dec 2015	YE Sep 2022
England and Wales	208,000	270,000	29.81%
England	212,500	275,000	29.41%
North East	132,500	145,000	9.43%
North West	145,000	190,000	31.03%
Yorkshire and The Humber	145,000	185,000	27.59%
East Midlands	160,000	226,000	41.25%
West Midlands	164,000	225,000	37.20%
East of England	238,000	328,000	37.82%
London	400,000	525,000	31.25%
South East	273,500	370,000	35.28%
South West	216,000	295,000	36.57%
Wales	144,950	190,000	31.08%

Obviously how much of an issue this is depends on where you live but I think there is a separate conversation about why the cap is the same in the North East and the South East.

I don't disagree that subsiding house purchases is odd, but only because it artificially inflates house prices. I have much sympathy for people looking to buy a house nowadays.

Gavin83 said:
The last part is a fair argument though. All these help to buy schemes were created for those who need the assistance, not for the well off. You should really be buying flats and small 2 bed terrace housing with these schemes. If you can afford a 3/4 bed detached house then there’s an argument that the scheme really isn’t for you.

However I am I hypocrite. We used the LISA a few years back to buy our current 4 bed 1800sqf detached house. Was just within the £450k limit. As people who earn well above the average salary the scheme likely wasn’t really meant for us but since we qualified we’d have been silly not to use it.

Also to somewhat back up the original point of this thread we would no longer be able to buy the same house using this scheme. 

Yes, that's what I understood the point of this thread. In the governments defense (never thought I'd say that), it is being phased out.

I think no-one disagrees that it is unfair that you (just using you as an example because it's easier, sorry!) were able to buy this house whereas Gavin83 Jr can not buy this same house from you at a higher value using the scheme. But life isn't fair unfortunately.

Nath4n

You could potentially speak with the agent and suggest that they void your agency fee contract (or simply reduce the fee % to 0), to be replaced by an identical 'finders fee' contract with the buyer.