Lifetime ISA tweak to help first-time buyers

A savings vehicle engineered for people who work for themselves has been given modifications – albeit not those that supporters of contractors called for.

In an update on the Lifetime ISA, the Treasury clarified that the government’s financial ‘top-up’ will be available to LISA holders who are first-time property buyers when they exchange contracts.

So rather than have to wait until a property purchase completes, LISA holders could use the top-up (a 25% bonus of no more than a £1,000 a tax year), towards the deposit to secure the property.

The Treasury said: “Individuals will be able to withdraw all of their Lifetime ISA up to the value of their deposit, including any government bonus, at the point of exchange of contracts.”

Likely to be welcomed by first-time property buyers, the new details about LISAs will help reassure those financial services providers that plan to launch the accounts from April 2017, in light of Nationwide saying it will not be offering them.

Introducing the LISA in March at Budget 2016, the then-chancellor George Osborne said: “For the self-employed, it’s the kind of support they simply cannot get from the pensions system today.”