The chancellor has suggested that a new tax-free savings scheme could be put in to place to help first time buyers save for a deposit.
Alistair Darling has announced plans to help first time buyers (FTBs) save money for a deposit by offering them a tax-free savings scheme.
Speaking yesterday, the chancellor said that he was considering changing the rules governing Individual Savings Accounts (ISAs) to allow FTBs to deposit more tax-free money into them.
"One of the things I'm looking at is to have a special ISA where people can save with perhaps better concessions, providing they put that money into a deposit for a house. The idea would be a big help to young people who cannot get a 100 per cent mortgage because of the credit squeeze," he said.
Currently, consumers are allowed to save £7,200 in ISAs every year, including £3,600 in cash. It is believed raising the limit by just 25 per cent would allow a couple to save as much as £45,000 tax free in five years.
The move could help people who are unable to get 100 per cent or 95 per cent loan to value (LTV) mortgages, what with banks more reluctant to lend money in the current economic climate. First time buyers are now expected to pay over £30,000 upfront.
Meanwhile, the National Association of Estate Agents (NAEA) has claimed that FTBs without the baggage of old houses to sell have a good opportunity to enter the current housing market on favourable terms, particularly with house prices continuing to fall.
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