First-time buyers wishing to save for their first home within a Help to Buy ISA may be priced out of the Government scheme, a recent investigation by the BBC has found.
The Help to Buy ISA, introduced in December 2015, allows first-time buyers to get onto the property market by depositing money into a tax-free savings account, subsequently receiving a 25% Government bonus, up to a maximum of £3,000.
However, this 25% bonus is only applicable if the home purchased is below the national cap of £250,000, or £450,000 in London.
The investigation by the BBC has revealed that, in multiple areas around the country, the average price of a first-time home surpasses the purchase cap. Outside of London, the average price of a two-bed home exceeds the cap in 28% of areas.
The housing charity Shelter stated that the scheme only benefited ‘the lucky few’, and that the Government needs to direct more focus towards building new homes.
Commenting on the findings, a Treasury spokesperson stated: “The property price cap allows the Government to target support at those who are saving to buy their first home”.
In addition, the new Lifetime ISA, which is due to launch next year, will have a limit of up to £450,000 on house purchases. The scheme will permit prospective buyers to transfer their savings from a Help to Buy ISA into a Lifetime ISA.