Mortgages  

Help to Buy Isa fails to tackle supply

Help to Buy Isa fails to tackle supply

The Help to Buy Isa is warmly welcomed and further details are eagerly awaited.

The day-to-day reality is that first-time buyers are struggling to get on the property ladder. The biggest stumbling block is normally around lender affordability, closely followed by the deposit required.

Of the limited details available at the time of writing, for every £200 saved in to the Help to Buy Isa, the government will add an additional £50 in an attempt to ‘work hand in hand’ to help consumers purchase their first property (to a maximum of £3,000).

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What is not yet clear is if this is only aimed at new build properties and having seen some budget figures, it is suggested that this will create a £835m spend in the governments figures by 2019 to 2020.

The bigger question is where are these houses? Already there is a large shortfall of houses being built each year, and an increase in demand is not going to help.

The chancellor stated at the outset that this would be a budget for the homebuyer, the self-employed and business owner, all of whom have struggled over the years to easily obtain mortgage finance.

More recently, with increased competition across the market, lenders have been seen to be relaxing criteria to assist these particular types of customer.

The additional 5m pensioners who can soon access their annuities, as well as the new pension rules coming in April, will also increase the demand on property sales if more go into buy-to-let as expected.

I believe that customers should seek independent financial advice before looking to withdraw their life savings in this way.

If funds are to be withdrawn to put towards property, this also assumes that lenders will continue to lend to those who may already be enjoying retirement.

Dale Jannels is managing director of Atom (All Types of Mortgages Ltd)