First-time Buyers

Half a million have bought homes using a Help to Buy ISA

Christina Hoghton
Written By:
Christina Hoghton

Help to Buy ISAs have given many homebuyers a boost, with a government bonus on top of their deposit savings

Since the launch of the Help to Buy ISA over six years ago, nearly half a million (497,940) home purchases have been supported by the scheme, according to HM Treasury.

It added that 652,469 government bonuses have been paid through the scheme with an average bonus value of £1,149.

What is the Help to Buy ISA?

The tax-free savings scheme enables people saving for their first home to receive a 25% boost to their pot from the government when they buy a property of £250,000 or less (or £450,000 in London).

This means that for every £200 saved, first-time buyers can receive a government bonus of £50. The maximum government bonus is £3,000.

The scheme closed to new accounts on 30 November 2019 but existing savers can keep saving into their account until 30 November 2029.

Getting on the ladder

Buyers using the Help to Buy ISA paid an average £176,125 for their home, significantly lower than the
average first-time buyer house price of £231,704.

The highest number of property completions using Help to Buy has been in the North West and Yorkshire and the Humber. The areas with the lowest number of completions through the scheme are the North East, Northern Ireland and Wales.

The Treasury added that purchases using Help to Buy ISAs have slowed in 2022. Excluding two months at the start of the pandemic, January was the slowest month for five years.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “The ISA has been a useful leg up for hundreds of thousands of buyers, but in recent months it has been in decline.

“Runaway house prices and sky-high rents have made it more difficult for first timers to raise a deposit, and now rising interest rates are making monthly payments less affordable too. This was always going to put the brakes on the first-time market eventually, and this may well be a sign that it has started to slow.

“If you have a Help to Buy ISA, one option is to transfer to a Lifetime ISA. That way you can put more into a LISA – £4,000 a year – and the government will immediately top it up by 25% – so you could get £1,000 a year from the government to help you onto the property ladder. It also allows you to buy a property worth up to £450,000 anywhere in the country.”