The Nationwide Building Society is calling on the government to extend access to the Help to Buy ISA savings scheme with just a year to go, and with the deadline for the last application fast approaching.
The Help to Buy ISA was launched in December 2015 and was designed to help first time buyers who open an account before 30 November 2019 to save for a house deposit and secure a home of their own. Since its launch, more than 196,000 savers have been supported in building their deposit by taking out a Help to Buy ISA, claiming an average of £800 in government contributions, in addition to their Help to Buy ISA savings pot, when they come to buy a home.
Each saver in the scheme can benefit from a government Help to Buy bonus of up to £3,000. Savers can deposit up to £1,200 in the month they open the account and a further maximum £200 in each subsequent month. For every £200 maintained in a Help to Buy ISA account, £50 will be paid by the government as a bonus at the time of purchasing a first home.
The minimum Help to Buy deposit bonus is £400 and the maximum £3,000. The Society’s Help to Buy ISA pays 2.5% AER.
According to Nationwide data, it now takes 6.5 years on average for a first time buyer in the UK to save at 10% deposit, totalling £18,480, compared with 4.8 years and £14,080 a decade ago in 2008. There are also large regional differences, with savers in the North currently requiring four years to save a 10% deposit of £10,100, while those in London need 12 years and £41,160 to reach the same 10 milestone.
According to Nationwide’s data, the Help to Buy ISA allows the average first time buyer to get on to the housing ladder two years sooner, given that the average age of a first time buyer who saved through the scheme is 28, compared to an average age of 30 for those who saved using another method.
The average house price for a first time buyer is currently £184,814, meaning that they need to save an average of £9,241 for a 5% deposit or £18,481 to put down a 10% deposit. However, there are large variations across the country, with first time buyers in London needing an average deposit of at least £20,581, while those in the North can get onto the housing ladder with just a £5,051 deposit.
Table shows average deposit by region:
| Q3 2018 Average House Price FTB | 5% Deposit | 10% Deposit | |
| London | £411,612 | £20,581 | £41,161 |
| Outer Metropolitan | £286,308 | £14,315 | £28,631 |
| Outer South East | £221,344 | £11,067 | £22,134 |
| South West | £199,791 | £9,990 | £19,979 |
| East Anglia | £183,326 | £9,166 | £18,333 |
| West Midland | £157,311 | £7,866 | £15,731 |
| East Midlands | £151,219 | £7,561 | £15,122 |
| Wales | £126,085 | £6,304 | £12,608 |
| North West | £124,842 | £6,242 | £12,484 |
| Northern Ireland | £124,152 | £6,208 | £12,415 |
| Yorkshire & Humber | £117,461 | £5,873 | £11,746 |
| Scotland | £112,251 | £5,613 | £11,225 |
| North | £101,010 | £5,051 | £10,101 |
Although the Help to Buy ISA is due to be withdrawn in the next year, savers have until 1 December 2030 to claim the bonus. This means that if there is no extension, Help to Buy ISA savers have only between now and 30 November 2019 to open an account and ensure they can still benefit from the scheme.
Tom Riley, Nationwide’s director of savings, said: “Home ownership continues to be a desire for many people, but saving for the deposit remains the biggest challenge for those hoping to secure a home of their own. The existing Help to Buy ISA scheme offers flexibility and simplicity and has been a proven success. As a result, we are we are calling on the Government to extend the scheme, and help many more young people saving for a house deposit in the process to help more people buy a home of their own.
“Currently the scheme is due to end for new applications on 30 November 2019, so in the absence of any extension we would urge potential first time buyers to open the Help to Buy ISA sooner rather than later to ensure they can continue to save via and be eligible to claim their 25% government bonus when they come to buy a home.”
All first time buyers with Nationwide will also qualify for a £500 cashback on all mortgage deals. Nationwide’s Help to Buy ISA customers are also eligible for the Society’s Save to Buy mortgage range, available to those with a 5% to 15% deposit.