Help to Buy ISA has delayed 45,000 first-time buyers

Ryan Bembridge

September 26, 2018

The Help to Buy ISA has delayed 45,000 house purchases because people don’t realised it can’t be used for the initial deposit, One Family research shows.

The 25% ‘bonus’ on the ISA can only be used to fund mortgage payments after the deal has been completed, meaning it can’t be put towards the initial deposit as first thought.

This unexpected and unwelcome news for first-time buyers has delayed a quarter (23%) of purchases using the ISA so far, of which there have been around 196,000 to date.

Nici Audhlam-Gardiner, managing director of lifetime ISAs at OneFamily, said: “If you are hoping to buy your first property then you need to avoid the Help to Buy ISA if you are planning to use the bonus towards your initial deposit.

“The average deposit for a first-time buyer is now more than £30,000 so it’s harder than ever to save up for a home, and for many people is by far the biggest hurdle.

“The Lifetime ISA, introduced last year, is far better for first-time buyers as not only do savers make more in government bonuses, they can actually use it towards the deposit.

“We support the closure of the Help to Buy ISA next year as it is not fit for purpose and is actually delaying property sales, however our research shows that the majority (55%) of first-time buyers remain unaware of the Lifetime ISA.

“We are urging the government to reiterate its closure plans and further support the Lifetime ISA and help the thousands of people who are desperate to get on the ladder.”

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