They propose two critical changes
The Building Societies Association (BSA) and The Investing and the Saving Alliance (TISA) are urging the chancellor to eliminate unjust penalties and antiquated regulations from initiatives aimed at supporting first-time homebuyers.
The two groups said that for many prospective buyers, stepping on to the property ladder presents a formidable challenge, with the BSA Property Tracker Report consistently highlighting deposit-saving as a major hurdle.
They added that Lifetime ISAs (LISA) and Help to Buy ISAs (HTB ISA) have proven beneficial to hundreds of thousands of initial homebuyers by providing a 25% boost to their savings upon purchasing their first property.
However, to ensure the continued relevance of these programs for current and future first-time buyers, they require periodic updates and evaluations.
BSA and TISA said two critical changes are needed now, namely reducing the Lifetime ISA withdrawal penalty to stop taking savers’ own savings, and increasing and equalising Lifetime ISA and Help-to-Buy ISA property price thresholds, reviewing them annually.
“The budget on March 6 is a great opportunity for the chancellor to make small changes that would have a big impact for would-be first-time homebuyers,” said Robin Fieth (pictured left), chief executive of the Building Societies Association.
“The change to the withdrawal penalty that we are calling for was introduced on a temporary basis during the COVID pandemic and provided much needed support to consumers in that difficult time. That shows it can be done.
“I would urge the chancellor to re-introduce this on a permanent basis, ensuring the spirit of these savings schemes, which is to encourage young people to start saving to buy their first home, remains intact.”
Carol Knight (pictured right), chief executive at The Investing and Saving Alliance, seconded Fieth’s statement, saying the current LISA framework needs to better serve savers.
“Our recommendations seek to address the limitations and complexities within the system, fostering an environment where investing and the possibility of owning your own home is more accessible for all,” Knight said. “Helping more people to start their financial journey in life with effective support through the LISA is a huge opportunity for the chancellor.
“Not only can implementing these reforms help more people make use of this scheme when looking to get on the property ladder but by making LISAs more flexible and attractive, we can also empower individuals to build robust retirement portfolios, enhancing their financial security in later life.”
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