Since 1st December 2015, first-time buyers have been able to save up to £200 a month in a Help to Buy: ISA, which many banks and building societies are now routinely offering.
An individual can only open one Help to buy ISA. They are not available to couples although, more than one government bonus can be put towards a home purchase. If a home is being purchased by two people who are both first time buyers, each can open their own account and receive the bonus.
In the first month, savers can deposit an initial sum of up to £1,200.
Your client is permitted to make as many deposits as required during the month as long as the amount deposited does not exceed the permitted amount (£1200 in the first month and £200 in subsequent months).
Savers do not have to commit to putting away any money each month.
The government will pay a 25% bonus on the savings and any interest earned. The minimum bonus is £400, the maximum bonus is £3,000 per Help to Buy: ISA. If there are two eligible buyers the maximum bonus could be up to £6,000.
To qualify for the minimum bonus of £400, savings of at least £1600 are required. The maximum bonus of £3,000 will require minimum savings of £12,000. Savings in excess of £12,000 will only receive the £3,000 maximum bonus.
The bonus is only available:
- On home purchases of up to £450,000 in London and £250,000 outside London;
- To first time buyers. A first time buyer is someone who does not own, and has never owned, a home anywhere in the UK or the world;
- To provide the final payment of the purchase price on completion. It cannot be used as the deposit payable on exchange of contracts or towards legal fees or any other associated fees or costs;
- Where the property is to be used as an ‘only home’. The property cannot be rented out or used as a holiday home; and
- The property must be bought with a mortgage. It is not available to cash buyers.
Solicitors/conveyancers will make the application for the bonus on behalf of their client. The solicitor will be required to certify that their client is eligible to receive the bonus and that the property being purchased meets the eligibility criteria. This will include submitting the required paperwork; requesting the payment; and, ensuring that the bonus funds are used towards the purchase price of the property.
Solicitors/conveyancers will only be permitted to act if they are registered as an eligible conveyancer under the Help to Buy: ISA Scheme Rules.
Conveyancers can register for the Scheme from January 2016. A precise date has not yet been announced.
Ison Harrison is ready to make an application to be registered as an eligible conveyancer as soon as a specific registration date is confirmed.