The Money Saving Expert says the Chancellor should announce a simple change to make things fairer in his Autumn Statement
Martin Lewis is urging Chancellor Jeremy Hunt to use his Autumn Statement later this month to overhaul “unfair” aspects of Lifetime Isas, which are often used by first-time buyers to get on the property ladder. The MoneySavingExpert.com founder and chair argued that young savers should not be essentially fined, and lose their hard-saved cash, when they buy homes above the scheme’s £450,000 limit.
It said this is because, in practice, Lisa savers get the 25% added soon after their funds go into the account. So, for example, each £1,000 becomes £1,250. But if savers withdraw the money for reasons other than buying a qualifying property before they are aged 60, they could face a 25% withdrawal penalty, which reduces each £1,250 to £937.50 .
“So I have formally contacted the Chancellor to urge him to make the system fairer. Many who have opened Lifetime with government encouragement now have not only a dead duck product, where they won’t get the promised 25% boost, but one with a poisoned beak, because they’re fined to get their money out.
“So, those who open them have a legitimate expectation they will be able to use them to buy the type of house they’re considering.” “It’s meant to be a scheme to help people buy their first home, but it actually ended up doing the exact opposite, as it took money away. We’re fortunate enough that we could move in with family while we made up the shortfall, but there are a lot of people who can’t do that, so it doesn’t seem fair.”
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