With a mounting offensive on the buy-to-let market and a new saving incentive, it’s clear the government is keen to boost individual home ownership, but will 2016 offer a genuine reprieve for first time buyers?
It’s been a difficult time as of late for young prospective homeowners. As many try desperately to scrape together enough cash for a decent deposit, they must also navigate their way through a marketplace occupied by seasoned investors and prospective landlords with pockets to match. For many, they simply can’t compete.
That however, may be set to change.
As of April 1st, the government will be implementing the first of a series of fiscal changes that they hope will help curb the burgeoning buy-to-let market and make space for first time buyers. The first of these changes-a 3% surcharge on stamp duty tax-will act as a deterrent to prospective landlords thinking of entering into the marketplace and further reformation in wear-and-tear allowance and reductions in tax relief, will serve to further bolster the government’s aims, putting buyers under pressure. This is potentially great news for first time buyers, however many critics believe additional costs to landlords will simply be borne out by tenants in the form of higher rental amounts. At a point where young adults find it a struggle to save already, for many it could be too much.
So is the government doing anything to help young prospective buyers work towards a deposit?
Well, yes. Starting from April 2017 the current ‘Help to Buy’ scheme will be bolstered by a new lifetime ISA, targeted at first time buyers. The scheme will offer recipients an annual 25% subsidiary on their savings, with funds being made available 12 months after set-up. The lifetime ISA will run separate from the current help-to-buy incentive and with plans to increase gross ISA limits to £20,000 annually; investors will have the opportunity to save using both, though they may only use the bonuses of one when purchasing a first home. Those who currently put into a help-to-buy scheme wishing to transfer to the new ISA will be able to migrate funds over and enjoy savings of 25% every year.
This new incentive is great news for those looking to save for a deposit, but there are pitfalls that the government may be overlooking. The fact remains, that many young workers are stretched to their limits and putting a significant sum of money into a savings account-regardless of the incentive-just isn’t an option. Add to that the potential bump in rent to accommodate higher fees for landlords and for many the prospect of their own home will be out of the question.
Struggling to save for a deposit? Confused about mortgage rates and what you can realistically afford? Taylor-Hall has you covered! Click the link here to put forward any queries you may have about buying your own home, or contact us on (0191) 581 9018 for a free financial consultation.