Lon­don­ers don’t like LISA

Evening Standard - West End Final Extra - ES Homes and Property - - News -

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

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