
Write to your MP to help the campaign
Finder has created a template email that you can use to write to your local MP and demand change for first-time buyers.
Download the letter for free here to copy it and use it in an email.
A recent Freedom of Information (FOI) request made by Finder has found that millions of people could be trapped in Help To Buy (H2B) ISAs, with nearly 2.2 million currently open, holding a total value of almost £5.5 billion.
A Help to Buy ISA is a type of savings account to help first-time buyers purchase their first home. You can pay £200 a month into the ISA and the government, will top up your savings by 25%.
For example, if you’d saved the maximum of £12,000 over 5 years, and used this to purchase your first home, the government would add an extra £3,000 on top to give you a total of £15,000. There is a purchase price limit of £250,000 (or up to £450,000 in London).
While house prices have been rising, the Help to Buy ISA limit has not increased. Research by Finder found that over half (58%) of UK regions will have average property prices above the H2B ISA’s current limit of £250,000 (for non-London properties) within 4 years. Since the H2B ISA was introduced in 2015, the average house price has increased by 38%, yet the limit has never increased.
The scheme is also being discontinued by the government – it is no longer possible to open a H2B ISA, and you won’t be able to pay into it after 2029. The Lifetime ISA (LISA) was effectively brought in to replace the H2B ISA and it helps resolve the property value issue with a house price limit of £450,000 across the UK. You can also pay up to £4,000 a year into it per year vs the £2,400 a year with a H2B ISA.
Both the H2B ISA and the Lifetime ISA come with a 25% bonus. However, the 25% bonus only gets applied on a H2B ISA when a property is purchased, whereas the 25% bonus is paid as you save in a LISA, but will only remain valid if you use it to purchase a house or access it when you turn 60.
You can’t combine a LISA and H2B ISA, meaning that someone wanting to take advantage of the LISA’s superior benefits would need to transfer their capital across. However, you aren’t allowed to move it all across into a LISA at once. It is only possible to transfer up to £4,000 per year across, at the expense of adding fresh money into a LISA.
I opened a Help to Buy ISA in 2016 to save towards buying my first home. House prices kept rising and I quickly realised the £250,000 limit would make it almost impossible to use the ISA in the area I wanted to buy. I decided to open a LISA as a replacement in 2021 but I’m angry that I have wasted my time completely with the Help to Buy ISA, with no bonus granted for the money I’d already saved in those 5 years. I’m also now restricted by putting £4,000 a year into the LISA so I can’t quickly build my savings in this account back up to the deposit contribution I’d already saved in the Help to Buy ISA.”
The main issue with trying to move from a Help to Buy ISA to a Lifetime ISA is that you are limited in the amount you can move in one go. Finder believes this could be resolved by a more flexible approach to combining Help to Buy ISA and Lifetime ISA savings, which does not penalise those who have already spent years saving into a Help to Buy ISA.
Commenting on the findings, Matt Mckenna, personal finance expert at finder.com said:
“It is hard to escape the feeling that the public are the ones being punished for the failings of the Help To Buy ISA. The Lifetime ISA effectively superseded it and offers more opportunity to save each year, so why can’t people simply transfer their savings (and the bonus they were promised) into it?
“Finder is campaigning for Brits to be able to move their full H2B amounts into a LISA in one go, keeping the bonus they have accrued. This will ensure that up to 2 million people with a H2B ISA can keep their much-needed government bonus and not lose ground in the long slog to save for their first property.”
Finder has created a template email that you can use to write to your local MP and demand change for first-time buyers.
Download the letter for free here to copy it and use it in an email.
Matt Mckenna
UK Head of Communications
T: +44 20 8191 8806
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