Help to Buy ISA helps nearly 2,000 people in the East Riding onto housing ladder

Nearly 2,000 people in the East Riding of Yorkshire have used the Government’s Help to Buy ISA scheme to get on the housing ladder, figures show.

Thursday, 2nd April 2020, 3:35 pm
1,926 people in this area received a bonus through the Help to Buy ISA scheme. Photo: PA Images

The tax-free savings account – which closed in November just under five years after it launched – has drawn criticism from housing charities such as Shelter for helping those who are already better off, while leaving some renters no closer to being homeowners.

Treasury data shows that 1,926 people in the East Riding received a government bonus through the Help to Buy ISA between December 2015 – when the scheme launched – and September last year.

In that time, an estimated 1,402 properties were bought through the tax-free savings account, with a quarter purchased between October 2018 and September 2019.

First-time buyers in the area each received a bonus sum of £910 on average last year. The national average bonus was £966.

The Help to Buy ISA scheme closed to new applicants in November last year, and savers with an account open will need to claim their bonus by December 1 2030 or risk losing out.

The Government boosts any funds saved in the account by 25% at the point the property is purchased. The minimum it will add is £400, while the maximum is £3,000.

Only individuals were able to open an account, but two people buying a property together can each use their bonus, giving them up to £6,000.

Buyers can only use their Help to Buy ISA to purchase a home worth a maximum of £250,000.

The average sale price of homes for first-time buyers in the East Riding was £152,000 in 2019, £2,600 more than in 2018 and £4,900 more than in 2016 – the first full year of the scheme.

The rule on using the bonus money on completion, and not at the exchange stage, has previously caused “confusion” among savers, the Mortgage Advice Bureau (MAB) said.

James Chidgey, new homes relationship manager at the MAB, said: “It can still mean buyers having to resort to temporary loans or assistance from family to put down the minimum 5% deposit required to reach exchange of contracts with a vendor.”

The separate Help to Buy equity loan initiative, which sees the Government offer low-interest loans towards a deposit on a new-build home, is still open.

Homeowners struggling to pay interest fees on their Help to Buy equity loans as a result of the ongoing Covid-19 outbreak were told they will be offered payment holidays, if the loan was taken out before March 31 2015.