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Nationwide calls for first-time buyer support in Autumn Statement

Nationwide calls for first-time buyer support in Autumn Statement
Shekina Tuahene
Written By:
Shekina Tuahene
Posted:
20/11/2023
Updated:
20/11/2023

Nationwide has asked the government to bring in more support for first-time buyers ahead of the Autumn Statement.

The mutual said rising costs were causing delays to homeownership and people’s ability to build a nest egg. 

Nationwide has urged the government to commission an independent review of the first-time buyer market to address the challenges in the sector. 

This includes the gap between income growth and house price growth, the supply of homes, the need for planning reforms and the impact of regulations on mortgage lending. 

Nationwide added: “A review would help the government produce a sustainable plan to support people hoping to buy a home of their own.” 

Bring back the Help to Buy ISA

The mutual has also asked for the government to reintroduce the Help to Buy ISA, citing the success of the previous scheme. It said the monthly amount which could be saved should be increased from £200 to £500. It also said the bonus should be increased to align with current house prices. 

Rachael Sinclair, director of mortgages and financial wellbeing for Nationwide, said: ‘‘Homeownership for many first-time buyers is a huge challenge.  

“Reintroducing the Help to Buy ISA would make a big difference to building a deposit, while a review of the first-time buyer market would help determine the right solutions for helping people get a home of their own.” 

Increase the Personal Savings Allowance (PSA)

Nationwide is calling on the government to increase the Personal Savings Allowance (PSA), which was introduced in April 2016 at a time when the interest rate was just 0.5%, more than ten times lower than today’s 5.25%.

Given the increase in interest rates, it means savers are more likely to breach the PSA thresholds, with their higher earnings subject to tax.

For basic rate taxpayers, savers can earn £1,000 of interest without tax, while higher rate taxpayers have a £500 PSA. Additional rate taxpayers are not given a PSA.

Back in 2016, based on the average rate paid on a non-ISA savings account (1.11%), a basic rate taxpayer would have breached the limit with £90,280 savings and a higher rate taxpayer with £45,140. Today, those figures would be £28,730 and £14,365 respectively (based on today’s higher average non-ISA savings rate of 3.48%).

As rates have increased, more people are having to pay tax on savings’ interest, while an increasing number of people have become higher rate taxpayers due to income tax thresholds being held at the last Autumn Statement until 2027/28 tax year.

Nationwide revealed that 17% of its savers in non-ISA accounts already have enough to exceed the PSA. And, while ISAs currently remain the most tax-efficient way to save, there is a limit on how much can be put in them (£20,000 each tax year for adults).