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An analysis of government data suggests that potential first time buyers have failed to take advantage of literally hundreds of millions of pounds in assistance to get on the property ladder.
Financial app Moneybox claims that 56,100 people bought their first home using a Lifetime ISA in 2022/2023, but with 300,000 recorded first-time buyers purchasing a home in this period, up to 243,900 more could have missed out on the government bonus of up to £4,000 each, per tax year.
The app firm says that according to activist group Generation Rent, saving a first home deposit now takes on average 10 years. It adds: “For anyone saving with a LISA, if you are able to save the full £4,000 each tax year during that period, aspiring FTBs could save £40,000 and also gain a boost of £10,000 through the government bonus.”
Some who have started saving with a LISA have subsequently lost out because they have withdrawn funds at short notice - thus incurring a fee.
Brian Byrnes, head of personal finance at Moneybox, says: “Saving the money required for a deposit continues to be one of the biggest hurdles many face on the journey to buying a home. The Lifetime ISA has been a fantastic helping hand for savers trying to get a deposit together, and perhaps more importantly, it has instilled healthy saving and investing habits that stay with people for life.
“An entire generation of first-time buyers have achieved their dreams of home ownership, with more than 170,000 homes purchased since the product was first introduced in 2017.
“However, with more than 18 million eligible to open a Lifetime ISA, it is clear that the true opportunity and benefits of this product are yet to be realised at scale. At Moneybox, we have seen first hand how instrumental the product has been to a whole new generation of homeowners having helped over 70,000 people buy their first home far sooner than would have otherwise been possible.”
He continues: “Introducing a penalty-free annual ‘Emergency Withdrawal Allowance’ so savers are not penalised if they need their money in an emergency, could provide greater reassurance to those in need. Additionally, while the property price cap has affected less than one per cent of Moneybox Lifetime ISA customers to date, if it had risen in line with house prices it would stand at £600,000.
“Therefore we are calling for the price cap to be index-linked in line with house price inflation. Last November’s Autumn Statement didn’t bring the progress that we had hoped for, but the Spring Budget represents a huge opportunity for the government to make relatively small and inexpensive changes to the Lifetime ISA ensuring the product remains just as invaluable for the next generation of aspiring first-time buyers.”
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Helping them to buy to support Big Developers make a killing.
Then lick their wounds when they find its not worth what they paid for it.
Now I must go and change a non standard door to a fire door never a problem since Built like whole Streets of houses. Yes there’s electric meter in there but it’s only a problem for my house strange that.
A mammoth of a job for what it is because the rebates are not deep enough for fire door, so router that but I did say non standard so cut down and re-lip, then router groves to accommodate smoke strips, hang with 100mm but hinges complete with ironmongery not finished yet up grade door stops now just 3 Coates of paint should suffice, label keep shut don’t forget to clear your rubbish & have an unwanted door to dispose off.
No problem for HMO inspector just tick boxes and break the Bank. Loads more…
It wouldn’t allow hinges proper name it said aware word and went red.
Nip up to Preston Michael I have a list of jobs for you..! Obviously we have been supporting each other on this forum so any chance of mates rates?!?! ;0)
I think the LISA is a great product, but most people are unaware of it. You can save more than in the Help to Buy ISA, get your bonus upfront, use with another person who is not a FTBer or put it in stocks & shares & use it as pension planning!
My adult kids have all got one - not for house purchase but for a tidy lump sum at 60 yrs - funded out of our income, so no IHT to pay EVER. I would advise anyone with adult kids & a bit of spare cash to look at them.
Problem is, it involves saving and most younger people these days just want to spend all their income on holidays, cars, phones etc etc. The old fashioned concept of saving up for something seems to have died with the availability of credit cards.
Instead of all these complicated tax payer funded schemes that very few people know about or engage with why not use the same tax payer funded pot to pay an equivalent of LHA to homeowners who fall on hard times?
The advantage would be that lenders could more confidently lend at lower rates as there would be less likelihood of non payment. Lower risk equals lower interest rate. Obviously with caps and limits in place. Maybe to cover the interest element of the 30th percentile house of whatever size? Only on the interest element of the original purchase price (not on any further advances). Only after someone has been a homeowner for at least 2 years.
To become a home owner in the first place people usually need a good job. These are people with marketable skills and a work ethic. Providing a bit of tax payer funded incentive to lenders to make getting a mortgage a bit easier would probably be far cheaper than the cost of LHA and temporary housing.
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