Midlands home buyers will benefit from Help to Buy ISAs

A new scheme has been recently launched to help first time buyers. It is a tax free top up that, according to TotallyMoney.com, will aid more people in the centre and north of the country than southerners. The reason is the lower price of houses here compared to those in the South-east.

To access, aspiring buyers should save between £1,600 and £12,000 in a five-year ISA. From 2020, the Government will top it up with an additional 25% (which means £50 tax free for every £200 put away each month, or £1 for every £4 the future homebuyer gets to save.

Single people making the maximum contributions will have £15,000 to put towards a deposit in around five years’ time. A couple saving to buy together will have the total amount of £30,000.

Here is a map showing areas where single buyers could afford (in blue) to buy a house in 2020, and where they couldn’t (in grey).

However based on prediction of house prices, single people using the ISA won’t be able to purchase anything between Cambridgeshire and Dorset in five years’ time. In London the situation will be much worse, with the only properties under £450,000 in 2020 set to be in Zones 4, 5 and 6.

The trend in Birmingham city centre will be more positive for home buyers, as TotallyMoney.com predicts that the average cost of a flat will be £122,600.

According to this, the new ISA would help a single buyer to save enough money to have a deposit of over 12% and a couple saving together would put down a deposit of nearly 25%.

In this map you can see areas where couples could afford (in blue) to buy a home in 2020, and where they couldn’t (in grey).

The conclusion is that despite George Osborne’s initiative, there is much more to be done in order to help first-time buyers.