Brokers have criticised the level of transparency around the Help to Buy Isa, which came under fire this week after it has emerged first-time buyers cannot use it to boost their deposits.
Help to Buy Isas have been set up to help renters save for a deposit, topped up by a 25 per cent Government contribution or “bonus”.
But the wording of the scheme means the top-up on savers’ cash will not be paid out until the sale has completed.
John Charcol senior technical director Ray Boulger says many consumers are confused about the Help to Buy Isa, as are lenders.
He says: “I don’t see it as a major problem, but it is one where people need to know how it works so they can plan accordingly.
“At face value, some of the information provided by lenders is not as clear as it should be. As the FCA requires lenders and brokers to make sure all their marketing material is fair, clear and not misleading, I don’t think it’s unreasonable to have the Government abide by the same principle. There is room for improvement in terms of presentation.”
Your Mortgage Decisions director Dominik Lipnicki says the confusion does not help the underlying problem of affordability in the UK that the scheme was set up to tackle.
He says: “If all it does is help the people that can already afford to buy, that’s not what it was designed to do. It was designed to help the people that can’t afford to buy.
“There is a very basic level of understanding about this. But that’s partly because at every Autumn Statement and Budget we hear ideas that are not totally thought out. The Government seems to, with one hand, make things easier for first-time buyers, then with the other hand take it away, be that through stamp duty or through things like this.”
Trinity Financial director Aaron Strutt says part of the confusion comes from the wide variety of sources a consumer can access information about the Help to Buy Isa.
He says: “Between the lender, broker, solicitor, Government and the consumer themselves, there are several areas where you could potentially expect to get advice, so is it a surprise that the message can get confused sometimes?
“It falls into this whole area of who should be advising the client.
“I wonder how many people would take out the Help to Buy Isa if they spoke to a broker first who could advise them about this technicality.”
Chadney Bulgin mortgage partner Jonathan Clark says: “Whilst the Government’s improvements to their Help To Buy ISA should be welcomed, most customers seem to lack an understanding of how they might help them and lenders generally make little mention of them on their websites.”
But Boulger adds the Help to Buy Isa scheme is a good one for consumers despite the confusion.
He says: “It is a fantastic scheme for people to save for a property. Even if they end up not using the Isa to buy a property, they get a good return on their money. Then they get a 25 per cent bonus on top. It would be a shame if all this controversy puts people off using the scheme.”