Only 16 percent of people with Help to Buy ISAs have been able to use it to buy a home.
What it means: The UK Conservative government set up the Help to Buy ISA in 2015 with the intention of getting more people on the property ladder (the average house price in the UK is currently almost 8x the average salary, so you can see why people were struggling a bit).
The idea was that Brits would put their savings into a special account and the government would top up those savings by 25 percent (up to £3,000 a year). But the government money would only be given to you when you actually bought a house, to stop people snaffling government funds for a blowout at Topshop or an all-inclusive holiday to Ibiza or whatever.
The problem with this plan is that most people who buy a house only pay the deposit upfront (and use a mortgage, i.e. a loan paid off in monthly installments, for the rest). And that deposit has to be paid before you’ve technically ‘bought’ the house, making it nearly impossible to use the Help to Buy ISA for the bit of house-buying most people needed their Help to Buy bonus for.
The upshot was that a quarter of home-buying was delayed as people realised they didn’t have as much money as they thought they did. And the government hasn’t made much of an effort to clear the confusion up, because 70 percent of wannabe home-buyers still think they will be able to use their Help to Buy bonus to pay for their deposit.
Tbf, none of this may matter for long, because the government is scrapping the Help to Buy ISA in 2019. It's replacing it with a Lifetime ISA where the 25 percent government bonus can be used for a first-time home or your retirement (yay) but where the maximum the government will give you is now is only £1000 a year (boo).
