This initiative will see the Government contributing £50 every month if the saver inputs £200, with an initial boost of £250 if the saver pays in £1,000.
In order to get any kind of top-up, the minimum savings requirement is £1,600 (which would be topped up with a £400 bonus), and the maximum top-up that the government will provide is £3,000. This means, in essence, that the maximum amount which can be saved over time is £15,000 - a total of £12,000 from the saver and £3,000 from the Government. This rate equates to the tax relief that would be added to a personal pension if the saver was to pay into that instead, with the big bonus being that the funds are accessible at any point.
I expect that most banks and building societies (and a few insurance companies) will offer these plans, and it will then be a case of weighing up which one is offering the best terms and rates of interest.
Further details will follow later in the year when the Government will set out exactly how these plans will work, the eligibility requirements and any restrictions that will apply.
I think that this type of initiative is vitally important, not just to help first-time buyers into the housing market, but to encourage youngsters to save, especially with the unattractive rates of interest currently available on the market. This, along with the auto-enrolment of most employees into pension plans, will hopefully encourage a new generation of savers.