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Orr criticises Osborne's 'Help to Buy ISA'
George Osborne has announced a new ‘Help to Buy ISA’ to help first-time buyers save for a deposit.
Under the scheme, announced in today’s Budget, the government will grant first-time buyers who are saving for a deposit a bonus of up to 25% of money paid into the new ISA.
Therefore, the government will provide £50 for every £200 saved. The maximum government contribution under the scheme is £3,000.
The bonus will be paid when the purchase of the home is complete, and be available for purchase on homes worth up to £450,000 in London and up to £250,000 outside London.
Chancellor Mr Osborne said the scheme would help ‘tackle two of the biggest challenges facing first-time buyers – the low interest rates when you build up your savings, and the high deposits required by the banks.’
Reacting to the announcement, David Orr, chief executive of the National Housing Federation dismissed the move ‘as another short-term initiative for first-time buyers, not a Budget to end the housing crisis.’
Mr Orr said: ‘The Help to Buy ISA will help people scrape together deposits but it fails to address the root cause of unaffordability – the chronic undersupply of homes, which has driven up prices.
‘It also does very little for those languishing on social housing waiting lists, in temporary accommodation and the homeless – who are victims of an undersupply of affordable housing.’
The existing Help to Buy equity loan scheme provides a government loan of up to 20% to first-time buyers, allowing them to purchase a new-build property with a 5% deposit.
The Treasury’s Budget document cited Department for Communities and Local Government statistics showing there have been 43,000 completions under the scheme since it launched in 2013.
UPDATE: 2.45pm 18.03.15
The Chartered Insitute of Housing (CIH) has also criticised the move. Gavin Smart, chief executive of the CIH, said: ‘While the help to buy ISA may help some first time buyers to overcome barriers to home ownership, it fails to address the fundamental problem – that we are simply not building enough homes.
‘Stimulating demand without also addressing the issue of supply runs the risk of further fuelling house price rises.’
