Use Pension Fund for House Deposits

Published / Last Updated on 02/06/2019

The Secretary of State for Housing, Communities and Local Government, James Brokenshire MP, has called on the new, incoming Prime Minister to change the law on accessing pension funds early.

Brokenshire suggests:

  • Allow first time buyers to dip into their pension and use it for a deposit when purchasing their first property.
  • 35-44-year olds have on average £35,000 saved in their pension, that’s a huge £70,000 deposit for a couple.

It is estimated that it takes first time buyers, on a UK average wage, 7-10 years to save for a deposit and in London up to 15 years. 


This looks a lot like Margaret Thatcher’s MIRAS (Mortgage Interest Relief at Source) where mortgages taken out between 1983 to 1988 attracted tax relief on the mortgage interest payments for the first £30,000 borrowed.  This fuelled a housing boom in the mid and late 1980’s which ultimately led to a property price bubble that then popped with negative equity in the early 1990s.

Is this really what the government wants?  Tax relief when you pay into a pension and then draw it out for a deposit.  Perhaps the Government would be better served concentrating on building more affordable homes rather than encouraging us to have no pension savings by our mid-thirties and early forties.  Indeed, we already have Lifetime ISAs where the government adds a 25% bonus to your savings when used for a deposit on a house purchase or if not used for property, it is left to grow as a retirement, savings fund that you can draw down on in retirement.

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