The Chancellor has announced a new Help to Buy ISA.
For every £200 a first-time buyer saves for their deposit, the Government will top it up with £50 more.
George Osborne said: “It’s as simple as this – we’ll work hand in hand to help you buy your first home.
“A 10% deposit on the average first home costs £15,000, so if you put in up to £12,000 – we’ll put in up to £3,000 more.
“A 25% top-up is equivalent to saving for a deposit from your pre-tax income – it’s effectively a tax cut for first time buyers.”
The bonus is available on homes up to £450,000 in London, and up to £250,000 outside London.
According to the Budget documents, the new ISAs will cost around £835m annually by the end of the next parliament.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The Help to Buy ISA is a great idea. It encourages people to save, which is a far better way of tackling the issue of high house prices than increasing loan-to-values.
“Getting a big-enough deposit is a problem in London and the south-east but less of an issue in the rest of the country.
“The Help to Buy scheme has been a roaring success; boosting it further with the Help to Buy ISA will really assist first-time buyers and give them more of a chance of making their dream of home ownership a reality.”
However, Adrian Gill, director of Your Move and Reeds Rains estate agents, said: “It’s all well and good getting first-time buyer finances in shape, but it will amount to hollow words if there are no properties available for them to buy, and if competition continues to push house prices higher and higher. Helping homeowners requires both sides of the conundrum to be tackled. The Chancellor has certainly done a good job of boosting demand – but now more needs to be done to sort out supply.”
Former economics editor of the BBC and now Newsnight presenter, Evan Davis, tweeted: “Giving money to home buyers without building any more homes just means you push up the price of homes (helping elderly home owners). Discuss.”
