The new Help to Buy ISA is expected to attract 1.2m first time buyers, offering them 25% towards the cost of their new home.
Here's what the housing industry had to say.
Paul Beresford, CEO of Essex based estate agents Beresfords Group said: “The Chancellor is dangling a very juicy carrot to first-time buyer voters in the form of the first ever Help to Buy ISA which will significantly help those trying to save in a climate of low interest rates and high deposits. Set to be introduced in the autumn, post-election, first-time buyers will receive a £50 top up for every £200 saved into the new ISA. This is great news for the local economy as Essex continues to offer value and connectivity to London for many buyers taking their first step on the property ladder. ”
Liam Bailey, Global Head of Research at Knight Frank, commented: “Almost 83,000 households have already purchased a home through the Help to Buy scheme and there is no doubt it has had a positive, if modest, impact on transaction volumes over the last two to three years. The new Help to Buy ISA is likely to be another support for first time buyers. However we do not expect the impact to lead to a substantial number of new transactions, and is very unlikely to influence pricing in the market.”
Paul Smith, CEO of haart, comments: “We welcome the helping hand of an innovative Help to Buy ISA. A 25% top up for the average first-time home deposit is a fantastic incentive to start saving and seeing the tangible results.
However, Mr Osborne’s last budget before polling day lacked concrete commitment to increasing housing supply across the UK. Without it, significant house price increases are on the cards. While this is positive for homeowners already on the property ladder it will make it even more challenging for those yet to make the leap. A golden opportunity to rebalance the property market has been missed.”
Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), said: “The Help to Buy ISA is a crowd-pleasing move and another sign of greater commitment to improving accessibility in the housing market. First time buyers will welcome the measure, but in many cases, their next step will be to ask which of the many schemes and incentives on offer is the best suited to their needs?
Offering the savings bonus on purchases worth up to £250,000 outside London or £450,000 in the capital looks far more sensible than the maximum £600,000 limit that currently applies to house purchases through the Help to Buy equity loan or mortgage guarantee. The £600,000 cap has proved unnecessary for the vast majority of homebuyers using either scheme to secure a mortgage. The new ISA is a welcome innovation – but the fact that different rules and timescales exist for the various elements of Help to Buy has the potential to cause confusion, and first time buyers will want to understand how they work in tandem.
We are sure to see more pre-election policy ideas to support first time buyers, and politicians must work closely with industry to ensure new measures are as clear and accessible to first time buyers as possible. Anyone confronting the array of choices is likely to find that expert advice is essential to make headway and ease their path towards homeownership.”
Graeme Yorston, Group Chief Executive at Principality Building Society, said: “A change to ISA rules giving ISA holders more flexibility and a new ISA for first-time buyers, is a huge step to empowering savers and incentivising first-time buyers to make that all-important first step onto the housing ladder. Trusting people with their own savings and enabling them to withdraw from an ISA as they choose is a progressive move that will enable people the freedom to withdraw and deposit, without it affecting their tax-free limit.
Similarly, the Help to Buy ISA will offer aspiring homeowners a crucial leg-up onto the property ladder by helping them to save that all-important deposit. Raising a deposit is a huge barrier to home-ownership for many young people, so today’s announcement will offer a clear incentive to work towards home ownership.
Of course, there will be questions around how these new products are implemented with providers, so we await further guidance on this.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "The Help to Buy ISA is a great idea. It encourages people to save, which is a far better way of tackling the issue of high house prices than increasing loan-to-values.
Getting a big-enough deposit is a problem in London and the south-east but less of an issue in the rest of the country. The Help to Buy scheme has been a roaring success; boosting it further with the Help to Buy ISA will really assist first-time buyers and give them more of a chance of making their dream of home ownership a reality."
Peter Williams, Executive Director of the Intermediary Mortgage Lenders Association (IMLA), said: “The Help to Buy ISA will be heralded as another welcome initiative and the latest milestone in George Osborne’s Help to Buy project to support home ownership. But given we are just weeks away from the General Election, whether or not the new Housing ISA sees the light of day – and what other measures might accompany it – remains to be seen.
Tax cuts for first time buyers will help to tip the scales in their favour, but they can only so much without more fundamental changes to housing supply and market structures. Anyone expecting a rescue package for homeownership in the UK will still be pinning their hopes on the upcoming election manifestos to go a step beyond this kind of welcome but ultimately piecemeal reform. The Help to Buy ISA will help some households but we must guard against a situation where house prices rise faster than savings – the fate suffered by previous interventions in this area.
Fragmented policies are not enough to fulfil the dreams of first time buyers; only a fully formed and long term strategy can turn the tide of sharply rising prices and declining owner-occupation. We fully applaud the objective to boost deposits and aid access to homeownership, but politicians must put aside the desire for headlines and cross the party dividing lines to fully address worsening affordability in many (but not all) parts of the UK .”
Adrian Gill, director of Your Move and Reeds Rains estate agents, said: “Help to Buy is the Chancellor’s trump card yet again – and this significant new ISA scheme will help thousands aspiring homeowners accumulate what they need to jump onto the property ladder. First-time buyers have been dealt a cruel hand in terms of affordability lately – interest rates on savings are low, house prices have largely been on the up for the past six years, and – until recently – earnings haven’t followed suit. This shortcut to saving for a deposit will bring home buying within range for many more, and consumer confidence will certainly shoot through the bottom rungs of the market.
But today’s announcement tiptoes around the elephant in the room. It’s all well and good getting first-time buyer finances in shape, but it will amount to hollow words if there are no properties available for them to buy, and if competition continues to push house prices higher and higher. Helping homeowners requires both sides of the conundrum to be tackled. The Chancellor has certainly done a good job of boosting demand – but now more needs to be done to sort out supply.”
Richard Sexton, director of e.surv chartered surveyors, said: “George Osborne’s Help to Buy ISA announcement will electrify the first-time buyer segment of the market. Autumn’s stamp duty shake-up created a stimulus for the housing market, and today’s revelation should turn up the wattage even further, spurring lower-end activity. If – that is – there are enough houses for first-timers to buy.
We have been waiting for consumer confidence to return, and this Budget bolt out of the blue could be exactly what is needed. The top-up system will provide a route around the problem of saving for a deposit while interest rates are low. And banks are primed, ready and willing to lend to worthy borrowers at higher LTVs. Meanwhile, over the last year, the lending landscape has been overhauled with new regulation, meaning even though first-timers are being given a massive boost, there will be no risk to the sustainability of the recovery. This is an attempt to remove the barriers created for first-timers in the recession, rather than an attempt to win younger votes.”
Citizens Advice, released a statement saying: "The housing challenge extends beyond those who struggle to get on the property ladder. This Budget was a missed opportunity to help the nine million people living in England’s private rented sector – many punished by poor standards and ripped off by exploitative fees and rents.
‘The number of issues involving private rent arrears that Citizens Advice dealt with increased by 13 per cent in the last year.
‘We want to see the market urgently brought under control – which includes giving tenants better rights and access to refunds. A recent decision to outlaw retaliatory evictions is welcome news, but there is much more to do."
Andrew Ellinas, Director, Sandfords said: "After five years of a coalition government, it seems as though our economy is growing slightly faster than was original planned for, and if Mr Osborne's predictions for growth are correct then it will provide a stable economy going forward which will be good for all sectors including property.
I welcome the news on the Help to Buy ISA, albeit with some caution as the devil is in the detail which is yet to filter out. We do however need a government that will help to ease up the restrictions on people raising finance as getting a mortgage now is proving to be extremely difficult, if not impossible, for many people. This seems like it will help first time buyers and this is turn will have a beneficial knock on effect across the property industry."
Patrick Bamford, Director – Mortgage Insurance Europe for Genworth commented: "Strengthening the Help to Buy portfolio with a new ISA for first time buyers amounts to clear recognition from the Chancellor that saving a deposit remains the single biggest hurdle to getting onto the housing ladder.
No aspiring first time buyer will turn their nose up at a 25% boost to their deposit savings. Even so, the idea will look a lot less attractive without extra steps to ensure first time buyers can rely on long-term access to mortgages with a 5% or 10% deposit.
Alongside this welcome addition to the Help to Buy scheme, the next government must take steps to prolong its existing measures and permanently boost high loan to value (LTV) lending through a mortgage guarantee that runs beyond 2016 in partnership with the private insurance sector.
Even with a helping hand with saving, first time buyers cannot afford a return to average deposits of 20%. The next government must not allow a situation where high LTV mortgage product availability and lender activity returns to recession levels when the current Help to Buy mortgage guarantee expires.”
Andrew Bridges, Managing Director of estate agent Stirling Ackroyd said: “The new Help-to-Buy ISA will lift many thousands of people onto the housing ladder – but it doesn’t address the realities of buying in London. Although a 25% top up to first-time buyers’ deposits will put power back into the hands of savers whose cash pots have been sapped by low interest rates, it may not be enough. Placing a finger on one side of the nation’s financial scales is only half the battle. It’s bricks and mortar that puts a roof over your head – let’s hope the London Land Commission do their homework. London can be housed. You just need to know where to look.”
Mark Hayward, managing director, National Association of Estate Agents (NAEA) said: “This initiative will provide a significant boost to the ability of a first time buyer to save speedily and effectively. This is exactly what is needed to engage the first time buyer market, particularly as we have seen the current criteria under the MMR constraining aspirations to buy a home. It especially benefits couples who are buying for the first time as both are eligible to open a Help to Buy: ISA which potentially means £6000 from the Government bonus towards a new home. It is also timely, considering house price inflation out paces wage inflation, so this additional boost to first time buyers savings pots will help them at least keep apace rather than fall behind the inflationary curve.”
