Budget 2015: New ISA ‘won’t help housing crisis’
While the Help to Buy ISA announced in the Chancellor of the Exchequer's Budget is expected to ease the financial strain on first time buyers, housing experts are questioning whether it will further increase the national housing shortage.
The accounts will see every £200 saved for a home matched by a £50 Government contribution, with a cap at £15,000.
Antony Pollard, director of economics at Turley, said:
"Whilst there is cross-party recognition of a 'housing crisis', the Budget set out a limited number of new announcements. The one which will inevitably receive most media coverage will be the Help to Buy ISA. This is evidently intended to build on the success of the current Help to Buy initiative. The extent to which this will fundamentally address a long-standing need to deliver housing is, however, limited. The same could also be said of the announcement to designate the first 20 new Housing Zones outside London, which it is acknowledged is only likely to support a total of 45,000 new homes against an annual national shortfall of over 100,000 homes. The Chancellor skilfully steered a course away from any wider reforms in planning policy."
Andrew Shepherd, private client services leader at EY in the North West, said:
"The accounts – expected to be available from autumn 2015 – allow savers to pay in an initial £1,000 contribution and then save up to £200 per month. Returns on the savings will not only be tax-free, but will also be matched so that for every £200 contributed, the Government will contribute £50, with a maximum bonus of £3,000 on £12,000 saved. The bonus will be payable when the funds are used to buy a property.
"For those yet to buy a property, the accounts will be more attractive than virtually any other savings offering. The account is available to those over 16 so parents, wanting to give their children a leg-up, can contribute to these kinds of account. If parents contributed the maximum amount to the ISA every month, their child would have £15,000 for a house deposit by the age of 21."
Nick Lee, managing director of NJL Planning said:
"The new Help to Buy ISA will have a significant positive effect on housebuilding. 25% extra being given by government to first time buyer deposits is likely to stimulate further demand in the market, with house builder shares already reacting positively. This will no doubt ripple through to further pressure for earlier planning consents for the industry."
Karen Campbell, North West head of tax at Grant Thornton, said:
"The top-up is capped at £3,000 for those saving £12,000 but the measure does not deal with the current housing shortage or the lack of supply of suitable housing. Our concern is therefore that the boost provided though the tax system could result in higher demand and ultimately lead to higher house prices."
Steve Errington, chief executive of Story Homes:
"Story Homes welcomes the Chancellor's proposal to introduce a Help to Buy ISA. By contributing to first-time buyer's savings in this way would-be homeowners will be able to move into their own home much sooner.
"This is good news for homeowners and house builders, it will boost confidence in the sector and lead to the construction of new properties."
Jon Suckley, partner at HOW Planning:
"This is a positive move by the coalition Government and should increase the access of first time buyers to mortgages. It still however remains the case that there is a significant shortage of housing across the country which requires addressing urgently."