Individual Savings Accounts: First Time Buyers

Treasury written question – answered at on 9 January 2024.

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Photo of Catherine West Catherine West Shadow Minister (Foreign and Commonwealth Affairs)

To ask the Chancellor of the Exchequer, what assessment he has made of the effectiveness of Lifetime ISAs for helping first-time buyers in London.

Photo of Catherine West Catherine West Shadow Minister (Foreign and Commonwealth Affairs)

To ask the Chancellor of the Exchequer, whether he has made an assessment of the potential merits of reducing the penalty charge to 20% for people (a) with Lifetime ISAs and (b) whose first property costs more than £450,000.

Photo of Conor McGinn Conor McGinn Independent, St Helens North

To ask the Chancellor of the Exchequer, what assessment he has made of the effectiveness of Lifetime ISAs for helping first-time buyers in (a) Merseyside (b) St Helens.

Photo of Bim Afolami Bim Afolami The Economic Secretary to the Treasury

The Government is committed to supporting people of all incomes and at all stages of life to save, and to making the aspiration of home ownership a reality for as many households as possible.

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 remains of the view that the property price cap is set at an appropriate level to support most first-time buyers across the UK while targeting households that may find it most difficult to get onto the property ladder. The withdrawal charge is needed to protect the LISA’s status as a long-term savings product. Reducing this and would encourage the use of LISAs in ways for which they were not intended.

The Government does not undertake an assessment of the effectiveness of the LISA by region, however the Government regularly publishes annual savings statistics, which includes information on the LISA. (https://www.gov.uk/government/statistics/annual-savings-statistics-2022)

The Government will continue to keep all aspects of savings tax policy under review and considers all representations made carefully, with any changes made as part of the Budget process.

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