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Lowest ever Help to Buy ISA home sales recorded in 2023

Lowest ever Help to Buy ISA home sales recorded in 2023
Paloma Kubiak
Written By:
Paloma Kubiak
Posted:
15/05/2024
Updated:
15/05/2024

Property transactions using cash saved up in Help to Buy ISAs fell to a record low last year, statistics reveal.

A total of 45,016 properties were bought using a Help to Buy ISA, while just over 56,000 bonuses were paid out, according to the latest quarterly statistics issued by the Treasury.

The number of properties bought using the first-time buyer scheme, which is now closed to new entrants, is less than half as many in 2021 at 93,922, Hargreaves Lansdown analysis revealed.

However, in total since the scheme was launched in December 2015, nearly 600,000 homes have been bought under the Government savings scheme, providing £973m in bonuses.

The average value of a property bought through the Help to Buy ISA stands at £177,877, compared to the average first-time buyer property price of £237,655, and an average property price on the market of £284,691.

The majority of homes were bought by first-time buyers in the 25-34 age category, while 69 property completions were by those aged 65+. Regionally, more people in the North West used the scheme (14%), followed by Yorkshire and the Humber (10%) and the West Midlands (9%).

The Help to Buy ISA explained

The scheme was closed to new entrants on 30 November 2019, when it was superseded by the Lifetime ISA. However, holders can continue saving into their account until 30 November 2029, while the bonus must be claimed by 1 December 2030.

For first-time buyers aged 16+, the Government boosts your savings by 25%, so for every £200 saved, the Government contributes £50.

It allowed applicants to save up to £1,200 in the first month and then up to £200 per month after that, with a maximum saving of £12,000 by the individual, which could attract a maximum Government bonus of £3,000.

The Help to Buy ISA can be used on properties up to the value of £250,000 across the UK or £450,000 in London.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said 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.

“It’s 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, with the best available for transfers (not restricted to existing customers) offering just 2.75%.”

Coles added that the cap on the value of the property you can buy through the scheme is “a major issue too”.

She said: “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. The savings limits haven’t changed either, and after the first month are limited to £200 a month.”

But for those who are worried about the £250,000 limit in a Help to Buy ISA, or if you want to pay in more each year, it’s worth considering transferring to a Lifetime ISA, as long as you’re aged 18-39 and have at least a year until you want to buy.

“The value of a property you can buy through the scheme is capped at a more generous £450,000, and allows £4,000 to be paid in each year. If you have longer than five years before you want to buy, Lifetime ISAs also offer a stocks and shares option, which provides more potential for growth over the longer term,” she said.

Coles added that it’s vital to understand how the switch works, though, “because money that’s transferred will come out of your annual LISA allowance”.

“It may well still be worth making the move, but you’ll need to do the maths for your own situation,” she said.

Related: End of Help to Buy: 10 alternative for first-time buyers