Londoners don’t like LISA
THE Government’s flagship scheme to help home buyers is no help at all in London, critics claim. The Lifetime ISA — or LISA — is a tax-free savings account aimed at 18- to 39-year-old first-time buyers, as well as people keen to save for retirement. However, the product is said to be overcomplicated and of little use to buyers struggling to raise a deposit to make the first rung on the capital’s pricey property ladder.
From next Thursday, under-40s will be able to save up to £4,000 per year until their 50th birthday and the Government will add a 25 per cent bonus. Those who save the maximum amount each year for the full life of the scheme could get an extra leg up, calculated at £32,000.
In London, however, with average deposits for starter homes at almost £90,000 according to the latest data from Lloyds Bank, first-time buyers would need to save for 18 years to scrape together enough money — by which point prices will have risen and still be out of reach.
“It is not a bad product, in that there is a Government bonus of £1,000 for every £4,000 you save and there is scope for other family members to contribute,” says Tim Bennett, a partner at wealth management firm Killick & Co. “It is something.” However, Bennett warns LISA buyers to go through the small print very carefully. Chiefly, savers should be aware that the LISA is ring-fenced for home deposits or pensions. Savers who need to withdraw their money for any other reason — apart from terminal illness — must repay their bonus, plus interest, and pay a five per cent penalty.
Find Ruth Bloomfield’s full story at homesandproperty.co.uk
Get a bigger moneybox: critics say LISA savings plan isn’t much good to London first-timers needing £90,000 for a deposit