With just one month to go before the Help to Buy ISA is launched, the government has confirmed five-steps buyers need to follow to claim their bonus.
Originally announced by Chancellor George Osborne in the March Budget, the Help to Buy Isa offers a major tax break to those saving up a deposit for a property.
The steps are:
1. First-time buyer puts money away in a Help to Buy ISA account.
2. First-time buyer closes their account when they are ready to purchase their first home and receives a closing letter from their ISA manager.
3. First time buyer gives the closing letter to their solicitor.
4. Using the letter, the solicitor applies online for the government bonus.
5. Bonus is transferred to the solicitor, who completes the purchase of the home using the full bonus amount.
Starting on 1 December, the scheme will give first-time buyers saving for a deposit the opportunity to put away £200 a month in a dedicated ISA that the government will top up by 25%, up to a maximum of £3,000.
First-time buyers can also open their account with a one-off lump sum of up to £1,000 in addition to the monthly maximum, while couples buying together will be able to combine their bonuses, meaning a potential boost of up to £6,000 towards a deposit for a first home.
Banks and building societies committed to offering Help to Buy ISAs include Barclays, Lloyds Banking Group, Nationwide, NatWest, Santander, and Virgin Money.
While the Help to Buy ISA has been welcomed by many, critics have said it fails to provide a solution to the ongoing housing crisis.
Earlier this year, David Orr, chief executive of the National Housing Federation, dismissed the move as “another short-term initiative for first-time buyers, not a Budget to end the housing crisis”.
“We are pleased that the government recognises how difficult it is to get on the housing ladder. But the housing crisis is a long-term problem that calls for a long-term solution and one that affects more than just prospective buyers.
“The Help to Buy ISA will help people scrape together deposits but it fails to address the root cause of unaffordability – the chronic undersupply of homes, which has driven up prices. It also does very little for those languishing on social housing waiting lists, in temporary accommodation and the homeless – who are victims of an undersupply of affordable housing.”
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