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Help to Buy Isas could benefit some clients, not all

This article is part of
Guide to Isas

Help to Buy Isas could benefit some clients, not all

Help to Buy Isas were introduced by the then Coalition Government in a bid to get more people onto the housing ladder and out of increasingly expensive rental accommodation.

Consumers can use this Isa in conjunction with other government schemes, including the Help to Buy: mortgage guarantee scheme; Help to Buy: equity loan scheme; and shared ownership.

The government provides useful information and frequently asked questions on its website to assist people with Help to Buy Isa queries.

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There is also a useful calculator on the government website which can help clients or prospective clients work out whether they might be eligible in the first place for a Help to Buy Isa.

It can gauge whether they will be able to use this vehicle to buy the sort of property for which they are saving.

Key points

■ A cash Isa designed to help people buy their first home.

■ Two strands: a Help to Buy Isa for London, enabling people to buy a first home worth up to £450,000 in London; and an Isa to help people buy a home worth up to £250,000 outside of London.

■ 25 per cent government bonus up to a maximum of £3,000.

■ Couples can hold separate Isas so can both benefit from the bonus.

■ Clients can open a Help to Buy: Isa until 30 November 2019. If they opened the Isa before then they can keep saving into the account.

■ Clients must claim the bonus by 1 December 2030.

According to Simon Bashorun, financial planning team leader at Invested Wealth and Investments, this is a good “tax-incentivised way of saving for a deposit on a first home with a government bonus”.

Who provides H2B Isas?

Aldermore (telephone and online only)

Bank of Scotland Barclays (branch and telephone only from January)

Buckinghamshire Building Society (branch and post only)

Chorley Building Society (branch and post only)

Clydesdale Bank Cumberland Building Society (branch only)

Halifax

HSBC

Lloyds

Monmouthshire Building Society (branch, post and online only)

Nationwide (branch and online only)

NatWest Penrith Building Society (branch, post and online only)

Progressive Building Society (branch and post only)

Newcastle Building Society

Santander (branch and telephone only)

Tipton & Coseley (branch and post only)

Ulster Bank

Virgin Money (online only)

Yorkshire Bank

Source: Government

However, according to Carol Knight, chief operations officer for the Tax Incentivised Savings Association, the Help to Buy: Isa may have its advantages, but also its restrictions.

She explained: “The Help to Buy: Isa is a cash Isa so investors can only subscribe to one in any tax year, not both, and only one can be held at any time. They are not flexible and can only be opened by first-time buyers.”

For Daniel Harrison, senior partner at True Potential Investments, the limits on how much can be saved could be disadvantageous.

“No more than £200 per month can be placed into a Help to Buy Isa,” he stated. “Also, the government bonus for the Help to Buy: Isa has a limit of £3,000. You have to have saved at least £1,600 into your Help to Buy: Isa to claim any bonus.”