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Property sales using a Help to Buy ISA plummet

Property sales using a Help to Buy ISA plummet
Christina Hoghton
Written By:
Christina Hoghton
Posted:
21/05/2024
Updated:
21/05/2024

Help to Buy ISA property sales have halved in the last two years, according to new figures.

The data, published by HM Treasury, showed that 2023 saw the lowest number of properties ever bought using a Help to Buy ISA – at 45,016.

This is less than half as many as 2021 (93,922).

In the three months to December 2023, Help to Buy ISAs have been used to buy 10,985 properties – down 9% from the previous quarter.

What is a Help to Buy ISA?

Launched in December 2015, the Help to Buy ISA is a scheme for those saving a deposit for their first home. It closed to new entrants in November 2019, but is still in operation for existing customers.

With a Help to Buy ISA, the Government boosts your savings by 25%. For every £200 you save, you would receive a Government bonus of £50. They were available from a range of banks and building societies, and the maximum Government bonus you can receive is £3,000. To receive that, you need to have saved £12,000.

It has helped with the purchase of 592,105 properties altogether, but last year saw a significant dip.

Sarah Coles, head of personal finance at Hargreaves Lansdown, explained: “The Help to Buy ISA had a horrible 2023. As the property market slowed to a trudge, the Help to Buy ISA lagged behind, dragging its feet and complaining. There were half as many purchases using the scheme as there were two years ago.

“It reflects the fact that it has been four-and-a-half years since the Help to Buy ISA closed to new entrants, and although bonuses can be claimed until 2030, the numbers are dwindling fast.

“As ever with a closed market, the savings rates aren’t much to write home about anymore, with the best available for transfers (not restricted to existing customers) offering just 2.75%.

“The cap on the value of the property you can buy through the scheme is a major issue too. Outside London, you can only buy a property worth up to £250,000 with a Help to Buy ISA, and the average first-time property is creeping ever closer to this figure.”

Alternative options

For savers who want to buy a property worth more than £250,000, the newer Lifetime ISA has a more generous cap of £450,000, plus you can save up to £4,000 per year.

It’s open to new savers as well as accepting transfers from Help to Buy ISAs.

Related: Slowdown in Help to Buy ISA property purchases