Nationwide has called for the government to extend access to the Help To Buy Isa.
There is now a year to go until the deadline for applying for a Help to Buy Isa. The accounts have been available since December 2015 and were designed to help first-time buyers save for a house deposit. The scheme closes to new applications on 30 November 2019.
Each saver in the scheme can benefit from a government bonus of between £400 and £3,000. A saver would need to save a total of £12,000 to get the maximum bonus.
Savers can deposit up to £1,200 in the month they open the account and up to £200 in each subsequent month.
For every £200 in a Help to Buy Isa, the government will add £50 as a bonus when the saver purchases their first home. Savers also earn interest on the money held in a Help to Buy sa.
Since the scheme’s launch, more than 196,000 savers have opened an account, claiming an average of £800 in government contributions.
Nationwide is urging the government to extend Help to Buy Isas beyond the current deadline. It says this is particularly important during a period of rising housing prices and living costs, and where any assistance for those saving for a deposit is a major bonus.
According to Nationwide data, it now takes six-and-a-half years on average for a first-time buyer in the UK to save at 10 per cent deposit, totalling £18,480. A decade ago it took the average buyer saving a 10 per cent deposit of £14,080 less than five years.
According to Nationwide, there are also large regional differences, with savers in the North currently requiring four years to save a 10 per cent deposit of £10,100, while those in London need 12 years and £41,160 to reach the same 10 per cent milestone.
According to Nationwide’s data, the Help to Buy Isa allows the average first-time buyer to get on to the housing ladder two years sooner, than someone saving using another method.
Although the Help to Buy Isa is due to be withdrawn in the next year, savers have until 1 December 2030 to claim the bonus. This means that if there is no extension, Help to Buy Isa savers have only between now and 30 November 2019 to open an account and ensure they can still benefit from the scheme.
Nationwide’s director of savings Tom Riley says: “Home ownership continues to be a desire for many people, but saving for the deposit remains the biggest challenge for those hoping to secure a home of their own. The existing Help to Buy sa scheme offers flexibility and simplicity and has been a proven success. As a result, we are we are calling on the government to extend the scheme, and help many more young people saving for a house deposit in the process to help more people buy a home of their own.
“Currently the scheme is due to end for new applications on 30 November 2019, so in the absence of any extension we would urge potential first-time buyers to open the Help to Buy Isa sooner rather than later to ensure they can continue to save via and be eligible to claim their 25 per cent government bonus when they come to buy a home.”
The government launched the Lifetime Isa in April 2017 as an alternative savings product for first-time buyers and people looking to save for retirement. First-time buyers aged between 18 and 39 can deposit up to £4,000 in each tax year, and the government will pay a 25 per cent bonus (up to £1,000 each year).