Help to Buy ISAs: how clued up are in-branch staff?
It has been three months since the launch of the government’s flagship Help to Buy ISA scheme, which aims to get more people on the property ladder.
Under the scheme, the government will give you a £50 top-up for every £200 you save into a Help to Buy ISA. You can save a maximum of £12,000 so that means you could get £3,000 extra from the government.
Last month, we reported how 250,000 people had opened a H2B ISA account; that’s nearly one every 30 seconds, proving their popularity. But just how clued up are in-branch staff about the product?
Our mystery shopping exercise reveals the truths, myths and mistakes the banks and building societies are telling customers.
- First time buyer looking to purchase property with my partner
- Already have a cash ISA with between £15,000 and £15,240 (the max amount)
- Looking to buy in Kent
- Want to know more information about the scheme and what the bank/building society is offering
How did the banks and building societies fare?
We visited a number of providers near our central London-based offices to quiz the staff on the Help to Buy ISA. Here’s what we found out.
The staff member who greeted me told me I could make an appointment with an adviser to chat about the product but said he’d try and help me with my questions. I asked how much could be put into the scheme in the first and consecutive months and he had to ask his colleague. As I was looking to buy with my partner, I wanted to know if we could each have a H2B ISA. Again the staff member was unsure about this. Lastly, I told him I had read that there were different amounts for the property that I was eligible to buy, depending on whether it was based in London or out of London and asked him if he knew. He said I would need to check this information.
The facts: You can put away £1,200 in the first month, followed by up to £200 per month after. Once you reach £1,600, the government will top-up your savings with 25% – £400 – this is the minimum amount you can have before receiving the government top up. The maximum you can save is £12,000 and the government will add £3,000 to your savings pot. If there are two of you, you can get a maximum of £6,000. To be eligible, a property in London can be worth up to £450,000, outside London it’s £250,000.
The member of staff seemed pretty knowledgeable about H2B ISAs and told me that if I have less than £1,000 in an existing ISA, I can transfer it to a H2B ISA. If I have more in the current tax year, I need to withdraw the money and therefore lose the tax free status in order to put it into a H2B ISA. The maximum that can be put into a H2B ISA in the first month is £1,200 and Halifax told me that this needs to be made in two separate transactions. She told me that I can only have one cash ISA in any tax year and as H2B is considered a cash ISA, if I have existing ISAs, these can be “renewed” (she meant transferred) with other providers, though I can’t open a new ISA. I asked if the H2B ISA can be used with the Help to Buy mortgage (equity loan) and she was unsure so consulted the computer.
The facts: Technically, the rules state that you can only have one cash ISA at any point and a H2B ISA is considered a cash ISA. However, some providers such as Nationwide allow you to split your money into a cash ISA and a H2B ISA, though the £15,240 limit still applies. As an example, if you put the maximum amount allowed into a H2B ISA (£3,400 in your first year) you’ll be able to deposit up to £11,840 in the other cash ISA product.
A Halifax spokesperson told me that the scheme rules permit a customer to make an initial deposit of £1,000 plus a monthly amount of up to £200. “Whilst we encourage customers to set up accounts in this manner (i.e. initial deposit and a standing order) we do allow customers to make a single payment or transfer in of £1,200”. He added: “Like most of our competitors, we do not offer an ISA wrapper that enables customers to have two ISAs but that technically count as one”.
I spent quite a bit of time with the staff member discussing the ISA product but honed in on the fact that she told me I needed to have an HSBC current account in order to open a H2B ISA. I said I wasn’t aware of this and that I banked with another provider. She asked her colleague whether this was correct and she assured me that it was right. We then proceeded to discuss the three different HSBC current accounts which may be suitable for me depending on my monthly earnings.
The facts: You do NOT need to have an HSBC current account in order to open an HSBC H2B ISA. An HSBC spokesman said: “We are very disappointed that incorrect information on Help to Buy: ISA was provided. I can assure you that all frontline staff have completed training on this product – which includes eligibility criteria. This is the first incident of this kind that has come to our attention and we will be raising this matter with members of staff in the branch concerned to ensure this does not happen again. Frontline staff will be receiving additional training, this will be followed by regular assessments and internal mystery shopping exercises as we head towards a new tax year, ensuring staff provide clear and accurate information to all customers.”
As soon as I asked if I could speak to someone about the Lloyds H2B ISA, I was asked whether I banked with Lloyds. So I queried whether I would need to have an account in order to open the savings product. The staff member told me she’d need to ask a colleague. She then confirmed that I don’t need to have an account in order to open a H2B ISA. She told me all the information could be found online and asked whether I’d prefer a leaflet with the information. However, she came out of an office without a leaflet and again told me all the details can be found online.
I approached the window and asked if I could speak to someone about H2B ISAs. The cashier said she could try and help me out. She told me that I need a minimum of £1,600 in order to get the government bonus. If either of us have a property abroad, we’d need to check whether we have a mortgage or own the property outright which would dictate whether we could open a H2B ISA. I asked what the value of the property could be and was told that I’d need to check on the government site. As I’d maxed out my cash ISA this year, I wouldn’t be able to open a H2B ISA.
The facts: The H2B ISA is only for those buying their first property and you must not own a leasehold or freehold property anywhere in the world in order to be eligible. You must also occupy the property as your main residence. To qualify, the property must be bought with a mortgage and can cost up to £250,000 or £450,000 if you’re buying in London.
I spoke to a fairly new member of staff who led me into an office where she read information off screen about the scheme. I told her both me and my partner were first time buyers so I wanted to know whether we could each have a separate H2B ISA. She went to ask her colleague to confirm. I also asked about my current ISA – I told her I’d maxed out my cash ISA and asked whether I can have a H2B ISA as well. Again she left the room to ask a colleague and confirmed that I wouldn’t be able to open the product in this tax year.
The facts: If you currently have a cash ISA and you opened and paid into it after 5 April, you can transfer up to £1,200 of your cash ISA into a H2B ISA. The government site says any other money in your cash ISA should be moved to another account, such as a stocks and shares ISA. Though some providers such as Nationwide and NatWest allow you to hold both a cash ISA and H2B ISA.
A friendly staff member ushered me into his office to answer my questions about the scheme. I asked what Natwest was offering customers opening a H2B ISA in terms of interest rates and how this compared with competitors. He wasn’t able to tell me off the top of his head but had to double check the figure – 2% AER variable.
For the full details, see our Help to Buy ISA guide.