Last year saw the lowest number of properties ever bought using a Help to Buy ISA, new Treasury figures have revealed.
Just 45,016 properties were purchased using the scheme, less than half the 93,922 bought in 2021.
The final three months of last year also saw a significant slowdown in people using Help to Buy ISAs, with just 10,985 properties bought with them in Q4, a total down 9% compared to the previous quarter.
Help to Buy ISAs opened in December 2015 and closed to new entrants in November 2019. They have now helped with the purchase of 592,105 properties altogether.
However, according to the latest Treasury figures, the average value of a property bought through the Help to Buy ISA is just £177,877, significantly less than the average first-time buyer property price of £237,655, and an average property price of £284,691.
Head of personal finance at Hargreaves Lansdown, Sarah Coles, said that 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,” Coles commented. “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.”
Coles suggested that the cap on the value of the property an individual can buy through the scheme is also a “major issue”.
Under the scheme, there is a cap on the value of the purchased home of £250,000, or £450,00 in London. Users of the scheme can pay up to £200 a month into their ISA, with the Government topping up any savings by 25%, a bonus that can be claimed until November 2030.
“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,” she continued.
“The savings limits haven’t changed either, and after the first month are limited to £200 a month. The government bonus is also capped at £3,000, so if you take full advantage of the scheme – paying in £12,000 and getting a £3,000 bonus – in total you can build a deposit of £15,000. It's only very slightly over 5% of the price of the average property.”
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