Lifetime ISAs ‘significant’ for first time buyers
A residential property law expert said plans for Lifetime ISAs announced by the Chancellor in Wednesday’s budget are a nod to the concerns of those in their 20s and 30s who cannot afford to buy a house.
George Osborne announced in his eighth budget that Lifetime ISA accounts can be opened between the ages of 18 and 40 and any savings you put into it before your 50th birthday will receive a 25% bonus from the government.
So, if you save £4,000 a year you’ll receive a £1,000 bonus, some or all of the money can be used to buy a house. Or you can use it to save for retirement.
Michael Foxford, partner at Birchall Blackburn Law, said: “This is significant for first time buyers and it ought to enable people to get on the ladder.
“People are likely to start their ISAs at a younger age but it should mean they are in a position to buy their first home before they are 40 – without this that’s where we would’ve been heading.
“First time buyers need this help. It is also interesting to note that people will be able to roll their existing Help to Buy ISAs into these schemes.”
The accounts will be available from 2017 and are limited to one per person, rather than one per home so two first time buyers can both receive a bonus when buying together.
If you have a Help to Buy ISA you can transfer those savings into the Lifetime ISA in 2017, or continue saving into both – but you will only be able to use the bonus from one to buy a house.