The Budget contained plans to help people get onto the housing ladder, including the introduction of a “First Time Buyer Isa”. This is an account in which savers can build up a deposit, with the government topping up contributions of up to £4,000 each year with a 25% bonus.
The new savings account will be introduced in 2029, replacing the existing Lifetime Isa, which has been criticised by some for imposing harsh penalties on those buying homes for more than the £450,000 cap.
The cap will remain, but the new “First Time Buyer Isa” will ensure savers are not penalised by losing their own money when making withdrawals. Savers will only lose contributions made by the government when making withdrawals which are not eligible for the account.
The penalty for withdrawals from existing Lifetime Isas will be lowered, too, to address concerns about savers being punished.
The government had already revealed a £4.7bn scheme for first-time buyers in England dubbed Your First Home. It is aiming to help 70,000 individuals and couples get on the housing ladder
The scheme will allow people to buy a new-build home with a deposit of 2.5%. It will provide them with a loan worth 20% of their property’s value to help pay for the purchase.
Capped at £110,000 outside London and £140,000 in the capital, it is aimed at those hoping to get on the housing ladder without help from “the bank of mum and dad”.
