A significant number of first-time buyers are still unaware of the assistance available to help them get on the property ladder despite the government’s attempts to support them with new schemes such as Help to Buy.
According to research by lender Precise Mortgages, 41% of people in the UK have a low awareness of the government’s Help to Buy ISA which launched in December 2015.
More than a quarter of people surveyed (27%) admitted to not knowing much about the ISA, whilst 14% stated they had never even heard of it. A further 13%, despite knowing about it, don’t think it is enough to help people buy a home and that greater government help is needed.
The announcement of the Lifetime ISA to help the under-40s get on the housing ladder in last month’s Budget was greeted with much interest. However, with such little knowledge of the Help to Buy ISA it is unclear whether the Lifetime ISA will actually reach the people who it could benefit.
The research found that over half of renters (51%) see saving a large enough deposit is still seen as the biggest barrier to owning home, followed by finding an affordable property (41%) and getting a mortgage approved (33%).
Meanwhile, 37% of UK renters say they are currently not looking to purchase a property simply because they can’t save for a deposit.
Alan Cleary, managing director of Precise Mortgages, said: “Barely a month ago, the Chancellor announced the introduction of another initiative to help first time buyers. The Lifetime ISA will see the government gift £1,000 to savers who can put away £4,000 a year. It’s clear from this that the government is trying to support first time buyers up and down the country to access the property ladder.
“However, better communication of the support available is needed – if the message isn’t getting to people it needs to, it follows that some of these people will be missing out on help that could prove vital in helping to get them on the property ladder. More must be done by the government and industry alike to increase the knowledge of these schemes across the board, not just amongst first time buyers, but also those who they turn to for guidance when thinking about saving to purchase their first property.”
The government has introduced a number of new schemes in recent years to help those looking to buy a home.
Help to Buy ISAs, introduced in December, 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.
The Lifetime ISA will allow anyone younger than 40 to put away up to £4,000 a year until they are 50. For every £4 people save, the government will give them back £1, a bonus of up to £1,000 a year.
Chancellor George Osborne said that it will help people to save for a new home or retirement. It will be launched in April next year and those with a Help to Buy Isa will be able to transfer their funds into it. Alternatively, you can continue saving in both, but you will only be able to use the bonus from one to buy a house. The Help to Buy ISA is due to end in 2019.
The savings and the bonus can be used towards a deposit on a first home worth up to £450,000. Accounts are limited to one per person, so two first-time buyers can both pair up and double their bonus.
Help to Buy London was launched on 1 February and gives aspiring homeowners who have been frozen out of the market in London the opportunity to get on the housing ladder. First-time buyers with a 5% deposit can borrow up to 40% of the value on a new home priced up to £600,000. They will need a mortgage of 55% to cover the rest.
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