The government has announced the Help to Buy: ISA. First-time buyers who choose to save through a Help to Buy: ISA will receive a government bonus, which will be calculated and paid when they buy their first home.
The government bonus:
- will only be made available for home purchase;
- can only be put toward homes worth a maximum of £450,000 in London and £250,000 in other areas of the UK; and
- can only be used towards a property that is the first-time buyer’s only residence, not buy-to-let.
The maximum government contribution is capped at £3,000 on £12,000 of savings. The maximum monthly saving is £200. The bonus will represent 25% of the amount saved, so the government will provide a £50 bonus for every £200 saved.
Accounts are limited to one per person rather than one per home, so those buying together can both receive a bonus. Savers will have access to their own money and will be able to withdraw funds from their account if they need them for another purpose.
Accounts can be opened through banks and building societies for a period of four years from the start date of the scheme. The government intends the scheme to be available from autumn 2015. The operational details will be finalised following discussions with industry.