Help to Buy scheme not helping many first-time buyers

A recent BBC investigation has found that the Help to Buy scheme is not helping everyone, with homes “too expensive”.

Only a few are able to take advantage of the Help to Buy government scheme, as people looking to buy a home our being priced out of the scheme, according to an investigation done by the BBC.

The price of a house under the scheme cannot exceed £250,000, or £450,000 in London, however the investigation found that starter homes exceed the price cap in many areas across England.

The scheme was introduced last year, to help people save up for a home, with the government saying that the cap allows the scheme to be aimed at first time buyer.

It was introduced to allow first time buyers to put their deposit into a tax-free savings account and get a 25% bonus, up to a maximum of £3,000 when they buy their home.

However, the Help to Buy ISA only gives savers a £3,000 bonus on their deposit if the price of the house is below the cap.

Housing charity, Shelter, said it only helped “a lucky few” and the government should focus on building more homes.

Analysis of a two bedroom starter home found that overall, outside London, two-bedroom homes exceed the cap in 28% of areas.

Average asking prices exceed the cap in 67% of areas in the South East, 65% in London, 61% in the South and 53% in the East.

In London, an average two-bedroom flat exceeds the cap in two thirds of boroughs, while one-bedroom flats exceed the cap in a third of boroughs, with only 10% of average three bedroom homes in London being below the cap.

Personal finance commentator Martin Lewis, of MoneySavingExpert.com, said savers should not be put off opening a HTB Isa.

He said: “It is a cash giveaway from the taxpayer.

“Even if you don’t end up using it to buy a house, you still have savings with a very favourable rate of interest.”

Campbell Robb, Chief Executive of housing charity Shelter, said: “Soaring housing costs have left millions of people stuck in a rent trap and struggling to save anything towards a home of their own.

“The Help to Buy ISA only helps the lucky few who are better off, or able to live with their parents while they save for a deposit. For the vast majority of renters who want to move forward in life and put down roots, this scheme brings them no closer to that dream.

“If the government genuinely wants to help the nation’s renters get a foot on the housing ladder, it needs to look beyond quick-fix schemes, and invest in homes that people on ordinary incomes can actually afford.”

 

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