As house prices continue to rocket, the government scheme which was created with the intention to help those most in need to get onto the housing market, is being priced out. There are restrictions in the terms and conditions of the Help to Buy ISA which stipulate the money is to be used for house purchases on property values of up to £250,000 in areas outside London and £450,000 in London. But with average house prices in the UK having increased by 8.2% in the last year since the scheme was released, how are people expected to find properties that are eligible?
We’ve analysed the latest House Price Index for April 2016 from the ONS and Land Registry data report to see where in the UK you’re eligible and not eligible to buy a house with the Help To Buy ISA.
The average house price in Inner London is £581,324 and outer London is £407,676, therefore, any average property in the whole of central London is unavailable to those trying to use the HTB.
In terms of average regional house prices there are 6 English regions that have average house prices low enough to meet the bracket, and 3 whole English regions are totally unaffordable for scheme beneficiaries. South East, London and East of England have been priced out of the Help To Buy cap. Here are the average property prices by region:
– West Midlands – £173,321
– South West – £227,403
– North West – £145,149
– South East – £301,688
– North East – £121,718
– London – £470,024
– East of England – £263,419
– East Midlands – £167,762
– Yorkshire and the Humber – £146,712
There are 18 counties in England that have an average house price higher than the cap for Help To Buy, these include:
– East Sussex
– Central Bedfordshire
– West Sussex
– Bath and North East Somerset
– Brighton and Hove
– West Berkshire
According to a BBC report, even starter homes now breach the HTB cap. Housing supply is far less than demand currently in the UK, as more people than ever are in need of a home with the population at its highest on record and growing. This scheme has simply been surpassed by the current market values of housing, and the limits need an immediate overhaul. The scheme is only available to first-time buyers, which could explain the low property value cap that was decided upon. Under the assumption that these young people would not need expensive housing to begin with. However, the cap now means that purchasing any housing at all using the Help To Buy ISA is proving nearly impossible across the entire East of England and in London.
Renting has been the only option for many people who have not yet made it onto the property ladder. And these ISAs were meant to be the saving grace for first-time buyers who are being locked out of the property market. But they no longer help people in over a quarter of areas in England looking for a two-bedroom property.