The report found that one of the biggest barriers to entry is that savers cannot pay into a Help to Buy ISA and a standard cash ISA in the same tax year. Almost a third (32%) claim they’ve already invested in a cash ISA this year and say this is the reason they won’t open a Help to Buy account. Equally, 29% are put off by the terms and conditions which include strong stipulations around how the money is withdrawn and spent.
Other reasons for not getting a Help to Buy ISA include: 28% want to save a larger amount of money in a cash or investment ISA, 25% feel it takes too long to earn the bonus and 26% do not want to be tied into a Government scheme. A further one in five (19%) feel the Government aren’t pledging enough to help and 13% don’t trust the Government to pay the bonus. More than one in ten (11%) have concerns that the value of the property you can buy with the money saved in a Help to Buy ISA does not increase year on year, this could be a huge problem with house prices currently in ‘acceleration’ mode.
55% of those surveyed do plan to take out a Help to Buy ISA and 50% rightly believe the 25% bonus is better than the interest you could earn on a normal cash ISA.
While just over half (51%) had heard of them, 69% of these were completely unaware that you can’t pay into one of these accounts alongside a standard cash ISA. One in five believe you can save the full cash ISA allowance in a Help to Buy ISA. This isn’t the case as the total amount you can pay into one of these new accounts is £3,400 in the first year; £11,480 less than the standard ISA allowance; thereafter savers can pay in just £2,400 a year. Just 15% are aware of the real limit of the Help to Buy account.
Additionally, there was some scepticism around the Government’s intention to use Help to Buy ISAs to help alleviate the housing problem, and 13% only see this as a way for banks to cross-sell products to first time buyers. When it comes to the interest rates paid on these accounts, 29% believe the Government should be working with banks and building societies to decide these and 25% think the rates should be fixed for four years.
Hannah Maundrell, money.co.uk, commented: “Help to Buy ISAs aren’t the silver bullet that will shoot wannabe first time buyers onto the property ladder, but the free cash will certainly give them a step up. Anyone that’s even contemplating buying a property should think about getting one, not least because the interest rates are likely to be competitive. Even if you’re buying in the very near future it’s likely to be worth opening an account as it will give your deposit a last minute boost."
