First-time buyers boosted by new Help-to-Buy Isa

Delivering his 59-minute speech to the House of Commons, chancellor George Osborne said: “The Budget takes another step to move Britain from a country built on debt to a country built on savings and investment.”

To help those hit by low interest rates and high deposits, Mr Osborne said the HTB Isa scheme would help those hoping to get a foot on the property ladder.

For every £200 saved for a deposit, the government will top it up with £50, he said.

The principle is that by cutting taxes, the return on savings increased. “People should have freedom to choose how they use those savings. It is as simple as this – we will work hand-in-hand to help you buy your first home,” Mr Osborne added.

For example, if a 10 per cent deposit on the average first home was £12,000, the government would add £3,000 more, and a 25 per cent top-up would be the equivalent to saving for a deposit from a saver’s pre-tax income.

With the news that inflation rates would remain low, the Isa would be welcomed by those struggling to get on the housing ladder, he said.

According to the 124-page Budget documents, the government will work with the industry to implement this in the autumn.

Paul Smee, director general of the Council of Mortgage Lenders, said: “Those who can save for a deposit will appreciate the boost announced in the Budget.

“But as saving for a deposit will never become easy, 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.”

The HTB Isa was one of four changes to help embed a savings culture. The others were: a flexible Isa, annuity freedoms and making the first £1,000 interest on all savings tax-free.

Key points:

• Once opened there is no limit on how long you can save.

• Available from Autumn 2015 for over-16s.

• Up to £1,000 initial deposit, in addition to monthly savings.

• You can save up to £200 a month.

• Accounts limited to one each person, rather than one each household.

• Minimum bonus size is £400 each person, maximum £3,000.

• Available on homes up to £450,000 in London and £250,000 outside London.

• Bonus will be paid when you buy your first home.

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Mitch Hopkinson, head of mortgages for international firm deVere Group, said: “It is a fabulous product, it will encourage the end of the market that needs support. If people lacked encouragement before because of low interest rates, they have no excuse now. It is amazing, particularly as it suggests each person as opposed to each household. For a couple saving, you now have £6,000 savings from the government.”

Mark Harris, chief executive of London-based mortgage broker SPF Private Clients, said: “Help-to-buy has been a roaring success; boosting it further with the HTB Isa will really assist first-time buyers and give them more of a chance of making their dream of home ownership a reality.”