Will Budget boost leave young home buyers out in the cold?

First time buyers could find themselves vying for affordable homes with cash rich retirees as a result of policies resulting from the Budget.

In theory George Osborne’s ‘Help to Buy’ ISA should assist thousands of young would-be home buyers in fulfilling their dreams of owning a property. 

However, at the same time retirees will now have the option of cashing in their pension pots – and many may choose to invest that money into the buy-to-let market for a better return.

I fear that the chancellor’s boost for aspirational young home owners and older investors will distort a housing market already straining under a lack of affordable housing. There is a danger that such a competitive marketplace will push up house prices.

The new savings plan is aimed at helping first time buyers afford a deposit, with the government giving a bonus of £50 for every £200 saved towards the deposit for a first home up to a maximum of £3,000 per person.

At the same time retirees will have the option of cashing in their pension pots – and many may choose to invest that money into the buy-to-let market for a better return. People aged over 55, who are able to access their retirement investments from April, will have a head start over younger buyers using the new ISA scheme, who may need several years to save for a deposit on even a modest house.

As a matter of urgency we must address this potential increased demand for affordable housing. If not, I fear that those first time buyers with a deposit bidding against cash ready retired investors will be left out in the cold. 

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