Individual Savings Accounts

Treasury written question – answered on 18th July 2022.

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Photo of Daniel Zeichner Daniel Zeichner Shadow Minister (Environment, Food and Rural Affairs)

To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of raising the £450,000 property value limit for the Lifetime ISA in line with house prices.

Photo of Richard Fuller Richard Fuller The Economic Secretary to the Treasury

The Lifetime ISA is intended to support younger people saving for their first home or for later life by offering a generous government bonus of 25% on up to £4,000 of savings each year. These funds, including the government bonus, can be used to purchase a first home up to the value of £450,000.

The Government considers that the £450,000 price cap is suitable to support the majority of first-time buyers across the UK, who typically purchase less expensive properties than other buyers, while ensuring sustainable public finances.

The most recent Office for Budget Responsibility forecast stated that bonus payments will have an exchequer cost of £3.7 billion between 2021 and 2027. The price cap ensures that this significant investment of public money is more precisely targeted towards households that may find it more difficult to get onto the property ladder.

First-time buyers who can purchase a home valued over £450,000 are likely to have an income significantly above that of the average household in the UK and are therefore more likely to be able to purchase a first home without the support of this scheme.

The Government continues to keep all aspects of savings policy under review.

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