Help to Buy Isa Q&A: Are they real help for first-time buyers or simply a vote-winner for the 2020 election?

The Chancellor announced a 25% top-up for deposits in the Budget. But before you go screaming 'free cash!', there's a few things you might want to consider

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I hear that the Government is giving me cash towards my first home?

That’s how George Osborne spun it, the truth is slightly less simple.

Will I get free cash?

If you fulfil certain conditions you can get up to £3,000 towards a deposit on a home if you’re a first time buyer.

That’s free cash! Where do I sign?

You’ll have to start a Help to Buy Isa and save regularly and the Government will give you 25 per cent on top of the amount you save when you buy a property up to a hand-out limit of £3,000, which you’ll only get if you’ve saved £12,000.

What if I have £12,000 already? Can’t I have the free cash now?

No. The new Help to Buy Isas won’t be introduced until the Autumn and then, while you’ll be able to deposit £1,000, the maximum you’ll be able to contribute each month will be £200.

So, hang on, I can’t have the free cash now?

No. The earliest you’ll be able to qualify for £3,000 from the Government will be sometime in 2020.

That can’t be right. Didn’t Osborne promise that he’s helping people now?

Look, if you start a Help to Buy Isa with £1,000 in say, September, and stash away £200 a month, it will take you four years and seven months to build up £12,000, which would qualify for a £3,000 bonus when you buy a house. That would take you to April 2020.

 

But won’t house prices continue to rise? That would mean the average deposit would cost more and £15,000 wouldn’t be enough, doesn’t it?

That’s highly likely. But there’s nothing to stop you saving more in a separate account or, if you’re part of a couple, bear in mind you can both open one of the new Isas. That would give the pair of you a £6,000 bonus in April 2020, or £30,000 deposit to put towards your home.

Isn’t April 2020 a month before the next election after this year’s?

That’s right. It means any first-time buyers who’ve diligently saved for four and a half-years will finally qualify for free cash from the Government a  month before the general election.

Does that mean the whole thing is a relatively cheap way to buy votes in 2020?

I doubt whether the Tories are that cynical about electioneering that far ahead of time. Let’s just call it a happy coincidence.

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