Several estate agents have pointed out the chancellor’s freshly-announced Help to Buy Isa may still miss the mark of helping first-time buyers disenfranchised from the property market, as rising property prices mean there are still a lack of affordable homes to buy.
In his Budget speech earlier today (18 March), George Osborne explained the new product would mean that every £200 people save towards their first home, will be boosted by an extra £50 from the government within the tax-sheltered account.
The minimum bonus is £400 per person and the maximum is £3,000, available on home purchases of up to £450,000 in London and up to £250,000 outside London.
A statement from the Treasury explained that accounts will be available through banks and building societies from this autumn, with no minimum monthly deposit.
While most commentators welcomed the move, Your Move and Reeds Rains estate agent’s director Adrian Gill said that it tiptoes around the elephant in the room.
He said: “It is 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.”
Alex Gosling, chief executive at online estate agents HouseSimple, commented that the biggest challenge facing first-time buyers is rising property prices.
He said: “If house prices rise at the rates that some have predicted over the next few years, young people simply won’t be able to save fast enough to keep up and the government’s Isa offer will be worthless if house prices are so far out of reach it’s not even worth saving for a deposit.”
Matt Hutchinson, director of flat share website SpareRoom.co.uk, pointed out that to get the maximum £3,000 bonus, with maximum monthly payments of just £200, people will be saving for four-and-a-half years, adding that prices will likely have then risen again and a £15,000 deposit will not be enough.
Mr Hutchinson said: “As for the bigger picture, this Isa will merely stoke demand without addressing the UK’s chronic supply problem.
“Unless house prices and rents become more affordable, we stand no chance of reaching the real housing goal, which is providing a range of affordable, secure tenures for all, so people can choose the one that best suits their needs.”
The Council of Mortgage Lenders’ director general Paul Smee said that the new product is welcome, but added “we still need a clear focus on the supply of new housing that will help deliver a sustainable, affordable housing market over the long term”.
Mark Hayward, managing director of the National Association of Estate Agents, was more positive, adding: “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.”
peter.walker@ft.com
