The scheme will help first time buyers to get £50 back from the Government for every £200 they save, and Osborne has said it will be ready to launch in autumn this year.
Osborne said:
"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."
Mark Harris, chief executive of mortgage broker SPF Private Clients, says:
"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, Jeremy Raj, property partner at London law firm Wedlake Bell, said:
"The newly-announced Help to Buy ISA will no doubt be eagerly received by those struggling to become first-time buyers. However, the money could have been better spent addressing the fundamental problems of affordability, high prices and a lack of supply. Of itself, the policy will not create any additional new housing, but will simply enhance the ability of a somewhat arbitrary group to better pay the high prices being demanded in the market.
"The Government persists with its fetish for home-ownership, exemplified by its failure to repeal the Right to Buy legislation which has seen social housing decimated and lost to the common good. Decades of under-provision of new housing must be attacked at all levels, in order to address the very real hardships being faced with regard to housing. Britain may indeed be walking tall again, but many do not have appropriate home to walk to.
"There appears to be in Government a deep mistrust of local government and housing associations, despite their unique position in being able to address the housing shortage. Liberalisation of their funding and planning abilities would have been far preferable to the announcement of twenty new Housing Zones, albeit the details of how the latter will actually work in practice have yet to be revealed."
Jeremy Duncombe, Director, Legal & General Mortgage Club, added:
“Anything that gives a boost to Britain’s young people looking to get on the housing ladder is broadly welcome. However, Help to Buy is not the same as helping to create homes to buy! Larger deposits for FTBs are only one piece of the puzzle – we need suitable, in-budget housing stock for first time buyers (and indeed the rest of the market!) to access.”
“Britain needs a quarter of a million new houses every year to meet current levels of demand. Without this, house prices will continue to rise above the level of inflation which will price first time buyers out of the market, regardless of the size of deposit they are able to save.”
