Concerns have been raised about the UK’s Help to Buy Isa which is aimed at first-time buyers saving towards a deposit for their first home.
When the scheme was announced last year by then Chancellor George Osborne it was assumed that young people would receive the extra money put in by the government towards the purchase of a home as part of their deposit.
With the average deposit on a first home around £15,000 the Chancellor announced that if first-time buyers saved £12,000 they would get the next £3,000 paid for them.
But now it has emerged that the scheme will no pay out before a home is actually purchased, leaving first-time buyers needing to save the whole £15,000 before they can actually complete a home purchase.
The small print of the government’s flagship Isa states that the bonus will not be paid out until the sale is complete and a spokesman suggested that it was never designed as a deposit saving scheme but to be put towards the cost of a home overall.
It is thought around 500,000 would be home owners have already taken out Help to Buy Isas and they now need to discuss with their banks what will happen when they are ready to receive the promised bonus from the government.
Mark Hayward, managing director of the National Association of Estate Agents, said that it has changed the goal posts for first-time buyers who have saved in a Help to Buy Isa. “Consumers have been putting money aside on the basis that they believed it would be applied to their deposit on a new home,’ he pointed out.
“To now clarify that it is not actually available until completion is the perfect example of a painful lack of transparency and frankly nothing short of deception. First time buyers are already struggling with getting on to the housing ladder and this much hyped initiative was welcomed at the time as a way of helping them, but in fact could have ended up costing buyers if they have gone ahead with a purchase believing that the bonus counted towards the deposit,” he added.