The Help to Buy ISA scheme was introduced by the government on the 1st of December 2015. The scheme is designed to offer a financial boost to first time buyers who are keen to get onto the property ladder.
Who can access the scheme?
To be eligible for the scheme, you must be 16 or older and be a UK resident. You must not own any other property and there are rules about whether you can have another cash ISA open at the same time as the Help to Buy ISA scheme. A number of banks and building societies offer Help to Buy ISAs.
How does it work?
The scheme entitles the ISA holder to a 25% government boost on savings up to the value of £12,000.00- so a maximum £3,000.00 bonus is payable. Payments into the ISA are limited to £200.00 per month, though in the first calendar month of opening the ISA you can pay in a lump sum of £1,200.00. You are not able to claim the bonus until you have at least £1,600.00 saved. You can make smaller monthly payments and you can close the account and withdraw money whenever you like- though this will of course affect your ability to claim the bonus.
The legal bit-
The scheme is designed to assist first time buyers purchasing a property up to the value of £250,000.00 (or £450,000.00 in London). When you find the property you wish to purchase and have at least the £1,600.00 saved in the ISA, you will need to inform your solicitor that you have a Help to Buy ISA. As the purchase nears completion, you should tell the bank or building society that you wish to close the ISA. They will then provide a letter which your solicitor requires before they can apply for the bonus to be paid towards the purchase costs. If the property purchase did not complete for any reason, your solicitor can return the bonus to the government so that you can continue to save in the ISA.
The scheme has now been in place for around five months and we have a large number of clients who have used the Help to Buy ISA scheme to boost their deposit towards a house purchase. Here at David Gray Solicitors we are experienced in dealing with these ISAs and we are more than happy to discuss any queries that you may have about your purchase.
Our Property and Conveyancing team can be contacted via Hayley Baker on 0191 243 8167 today.