The Budget in March this year announced the introduction of a new savings initiative designed to help savers buy their first home - the new Help to Buy ISA. Our previous blog on the subject can be found here.
These arrangements take time to get off the drawing board, so savers will need to wait a little longer for these new ISAs to go live as their commencement date has been pushed back to 1st December. The list of banks and building societies who will offer Help to Buy ISAs has just been announced and so far they will only be available from Barclays, Lloyds, Nationwide, Nat West, Santander and Virgin.
The 25% boost provided by the Government will be welcomed by many first time buyers, but in these times of low interest rates there are concerns that the returns available may not be that attractive. Savers interested in this route should also be mindful that they cannot contribute to both a Cash ISA and the new Help to Buy ISA in the same tax year, although it is still permissible to contribute to a stocks and shares ISA alongside a Help to Buy or Cash ISA, subject to the annual investment limits.
It’s important to note that whilst accounts are available to applicants over the age of 16, you can’t open accounts on behalf of your children because the Government boost can only be put towards the purchase of your first UK residential home, so this ISA is really only intended for first time homebuyers.
Those who wish to help their children to start saving for property purchase can still do so as there are no rules to prevent you from giving your children the cash, but the account will need to be held in their own name.