Issa’s Lifetime Savings Plan “Prevent Some People From Buying A Home” | it’s like

Representatives and activists said that a government plan to help people save to buy their first home prevents some from buying a property and leaves thousands of pounds out of their pockets for others.

They are calling on ministers to urgently review the rules that apply to Isa for life – which allow people to save for a home or retirement – over fears that some first-time buyers will be penalized.

If a person uses the scheme to buy their first home, the property must cost £450,000 or less – a maximum that has remained the same since April 2017, even though average UK house prices as measured by the Land Registry have risen by 35 percent. % since then and since.

Catherine West, Labor MP for Hornsey and Wood Green in north London, said that “with property prices skyrocketing”, many first-time buyers “are now being prevented from using [lifetime] Issa to buy their first home.” She added: “This is wrong and illogical, and the government should reconsider these rules.”

A couple who have been paying Esas for life since 2017, said the three- and four-bedroom homes they were looking at were well above the price ceiling.

They were expecting to receive a cash reward of £10,000 after they were able to pay a total of £40,000 in their lifetime to Isa. However, instead of getting compensation, they are faced with having to hand over £2,500 of their own savings to the government, making them worse than if they had done nothing.

Essa was launched for life in April 2017 and allows people to pay up to £4,000 each year until they reach the age of 50. The government will add a 25% bonus to individuals’ savings, up to a maximum of £1,000 per year. The 25% bonus has proven to be attractive, and Isa Omar is believed to have been opened to 1 million people.

But the £450,000 price cap has remained unchanged, despite property values ​​rising. In April 2017, the median home price in the UK was £218,000, while it was £295,000 in August this year, according to Land Registry data. In London, the average price was 552,000 pounds.

If the cap on Issa’s price had risen in line with this growth, it would now be around £609,000.

A 25% fee is charged if someone makes an unauthorized withdrawal, for example, if they buy a home that costs more than £450,000. This is designed to redeem the government bonus, but also takes away some of the original investment of the saver.

When the government recently changed the rules around stamp duties in England and Northern Ireland, she said the exemption for first-time buyers would now be applicable to properties worth up to £1, said Laura Sutter, head of personal finance at investment platform AJ Bell. 625,000 – up from the previous £500,000.

“They put it on [£625,000] As a realistic first-time buyer, however, Issa’s lifetime limit has remained steady at £450,000.

A Treasury spokesperson defended the price cap: ‘Life isa is one of the many ways the government is helping people move up the property ladder and save for later life. At £450,000 the cap for a lifetime isa is much higher than The average price that first-time buyers pay for a home outside London and comfortably higher than the price first-time buyers pay for a home outside of London, meaning it is appropriately targeted to support the majority of first-time buyers across the UK.”

“This is unfair and indefensible.”

New homes and narcissus
Residential property in Gloucestershire. David and Mary say it is “extremely difficult” to buy a family home for less than £450,000. Photography: Mark Bolton/Almy

David and Mary (they didn’t want to mention their surname), both public sector workers in their early forties and two children of primary school age. They may lose because of these rules.

The family left London several years ago, in large part because they could not afford to buy there, and are now renting in Gloucestershire, where they hope to eventually own a home.

They have been saving on Issa for life since 2017, and have paid each other £40,000.

“When my wife and I started saving in Isas for life, we comfortably expected to be able to buy our first home under the £450,000 threshold – a home to house a family of four,” David said. “But now, where we live, as in many parts of southern England, it is very difficult to buy a family home for less than that. Over the past couple of years, house price inflation has been ridiculous.”

The couple had expected the plan to give them a deposit totaling £50,000, consisting of what they paid in addition to the government bonus. But – assuming you go ahead and buy a property that costs more than £450,000, using the money they have saved – a 25% penalty would cut £40,000 to £37,500.

“We’ll do it already Get £2,500 less from our investment in a government-backed scheme designed to help us. In fact, we need to pay £2,500 to the government of our savings, and we lose interest that would have accrued through an alternative investment approach,” says David.

This is not fair and untenable. It is completely at odds with government efforts to help first-time buyers.”