Banking & Savings, Insights

Property ISA: Benefits, Fees & Everything You Need to Know

flik eco finance personal property isa

A Property ISA can be a great way to save for a house deposit. They offer tax benefits and are exempt from inheritance tax.

In this article, we will discuss the benefits of a Property ISA, the fees associated with them, and everything you need to know in order to decide if this is the right investment for you!

What is a Property ISA?

A Property ISA is a type of investment account that allows you to save money towards the purchase of a property. The money you save into your Property ISA is not subject to any tax, so you can grow your savings more quickly.

How Does a Property ISA Work?

A Property ISA is a type of investment account that allows you to invest in property without paying any taxes on your profits. This makes it an extremely attractive option for anyone looking to invest in property, as you can potentially make a lot of money without having to pay any tax on it.

How to Get a Property ISA

To get a property ISA, you'll need to be a first-time buyer. You can either save up the money yourself or get a mortgage.

Once you've saved up enough for a deposit, you'll need to find a property that's eligible for the ISA. The government has strict criteria for what counts as an 'eligible property', so make sure to do your research before you start looking.

Once you've found an eligible property, you'll need to apply for the ISA. You can do this through a broker or directly with the provider.

The application process is straightforward and shouldn't take more than a few days. Once you're approved, you'll need to transfer your deposit into the ISA.

And that's it! You're now ready to start saving for your first home.

What Are The Different Types of Property ISAs?

There are two types of Property ISAs: equity release and buy-to-let.

Equity Release

Equity release is when you take out a loan against the value of your home. The money you borrow can be used for anything, including funding your retirement or paying off debts.

Buy To Let

Buy to let is where you use the money from your ISA to buy a property, which you then let out to tenants. The rent you receive is used to cover the mortgage payments and any other costs associated with owning the property.

What Are The Benefits of a Property ISA?

There are a few key benefits that come with opening a Property ISA. Firstly, you’ll be able to take advantage of the government’s Help to Buy scheme. This scheme offers a tax-free loan of up to 20% of the property’s purchase price, which can really help get you onto the property ladder.

Another big benefit is that your money is locked away until you’re ready to buy a property. This means that you can save up as much as you like without having to worry about dipping into your savings for everyday expenses. And, because your money is locked away, you won’t be tempted to spend it on something else!

Finally, a Property ISA can help you to save on stamp duty. This is a tax that you have to pay when buying a property, and it can really add up. However, if you open a Property ISA and use it to buy your property, you’ll be exempt from paying stamp duty on the first £250,000. This can save you a lot of money, particularly if you’re buying a property in London or another expensive area.

What Are The Disadvantages of a Property ISA?

There are a few disadvantages of having a Property ISA. One is that you can only put in £200 a month, so it will take a long time to save up for a deposit on a property. Another is that the government has said that they may change the rules in the future, which could make Property ISAs less attractive.

Finally, there are a limited number of properties that you can buy through a Property ISA. This means that you may not be able to find the property that you want to buy.

Overall, though, Property ISAs are a good way to save for a deposit on a property. They have low fees and offer tax breaks, which can help you to save up for a deposit more quickly. If you are thinking of buying a property, then a Property ISA is definitely worth considering.

Who Are The Best Property ISA Providers?

There are a few key names to look out for when considering the best property ISA providers. These include:

The Funding Group

ne of the UK's leading provider of short-term finance for residential and commercial property investment. They offer a range of products including bridging loans, mezzanine finance, and development finance.

Octopus Property

A specialist lender that offers loans for residential and commercial property investment, including buy-to-let, HMOs, and student accommodation.


One of the UK's leading online property investment platform. They offer a range of products including buy-to-let mortgages, bridging loans, and Development Finance.

The Mortgage Works

A specialist buy-to-let mortgage lender owned by Nationwide Building Society. They offer a range of products including fixed rate, tracker, and variable rate mortgages.

What Commissions and Management Fees Come With Property ISAs?

Commissions and management fees are the two main types of fees associated with Property ISAs. Commissions are typically a percentage of the total value of the property, while management fees are a flat rate charged by the provider. Both types of fees can eat into your returns, so it's important to understand them before investing.

The commission on a Property ISA is usually between 0.75% and 0.95%. So, if you were to invest £200,000 into a property, the commission would be between £1500 and £1900. The management fee is typically a flat rate of around £100 per year.

What Is The Minimum Amount Required to Open a Property ISA?

The minimum amount required to open a Property ISA is just £100. You can then top up your account by £20,000 per year (or £16,667 if you’re a first-time buyer).

What Are The Eligibility Requirements for a Property ISA?

  • You must be a first-time buyer
  • You must be buying a property in the UK
  • The property must be worth less than £250,000 (or £450,000 in London)
  • You must have a minimum deposit of at least £1000
  • You must not have owned a property before
  • Your annual income must be less than £60,000 (or £90,000 for London)
  • You must not have any other active ISAs
  • You must open the account with a UK-regulated financial institution
  • To open a Property ISA you must be 18 years old or over

When it comes to eligibility requirements, that's really all there is to it! As long as you meet the criteria above, you should be able to open a Property ISA without any problems.

How Much Can You Contribute to a Property ISA?

The amount you can contribute to a Property ISA each tax year is £200,000. This is the maximum that you can contribute in total to all of your ISAs.

What is The Property ISA Contribution Deadline?

The Property ISA contribution deadline is the last day on which you can make a deposit into your account and still receive the tax benefits for that financial year.

For the 2023/24 tax year, the deadline is April 2019. After that, you’ll have to wait until the start of the new tax year (April 2023) to make any more contributions.

What Are Some Alternatives to a Property ISA?

There are a few alternatives to a Property ISA that you may want to consider.

Self-Invested Personal Pension

One option is a Self-Invested Personal Pension (SIPP). This type of pension allows you to invest in a wide range of assets, including property.

Joint Venture Partnership

Another alternative is a Joint Venture Partnership (JVP). With this type of investment, two or more people pool their money and resources to buy property together.

If you're not sure whether a Property ISA is suitable for you, it's always a good idea to speak to a financial advisor. They can help you determine which investment option is best suited to your needs and goals.

How Does a Property ISA Compare to a Savings Account?

With a Property ISA, you're investing your money into bricks and mortar rather than putting it into a savings account where it might not even keep up with inflation. With a savings account, you're also more likely to dip into it for day-to-day spending, whereas with a Property ISA you're committing that money to long-term savings.

There are, of course, risks associated with any investment, and property is no different. However, over the long term, property has proven to be a very stable and successful investment. With a Property ISA, you can also spread the risk by investing in multiple properties.

What Is The Difference Between a Cash ISA & a Property ISA?

A Cash ISA is a savings account where you can save up to £20,000 tax-free each year. The interest you earn on your savings is also tax-free.

A Property ISA is a special type of ISA that allows you to invest in property without paying any capital gains tax or stamp duty on the profits you make when you sell.

When Can You Withdraw Money From a Property ISA?

The great thing about a Property ISA is that you can access your money at any time, without penalty. This flexibility means that you can use your Property ISA to help fund a deposit on a property purchase, or to cover the costs of repairs and renovations.

When Should You Open a Property ISA?

You can open a Property ISA at any time, but there are some key moments when it makes sense to do so. For example, if you’re about to purchase your first home, you can use a Property ISA to save up for the deposit.

If you’re already a homeowner, you can use a Property ISA to top up your mortgage or make home improvements. And if you’re looking to downsize or move to a different property, you can use your Property ISA to help with the costs.

Is It Easy to Switch to a Property ISA?

If you're thinking of switching to a Property ISA, the process is actually quite simple. Your current ISA provider will transfer your existing ISA allowance into your new Property ISA, and you can then start making contributions to your new account.

Can You Lose Money With a Property ISA?

A property ISA is a long-term investment, so there's always the potential for your investment to go down in value as well as up. However, over the long term, house prices have tended to go up, so if you're investing for the long term, you're more likely to make a profit than if you were investing in something like stocks and shares, which can go down as well as up.

The other main risk with a property ISA is that you're investing in a single property, so if that property doesn't increase in value, or even decreases in value, then you could lose money.

However, if you diversify your investments by investing in multiple properties, then you can spread the risk and hopefully make a profit even if one or two of your properties don't perform as well as you'd hoped.

Overall, a property ISA is a relatively low-risk investment, but there are still some risks involved. However, if you're comfortable with those risks and you're investing for the long term, then a property ISA could be a good option for you.

How Much Should You Contribute to a Property ISA?

The amount you contribute to a Property ISA is up to you, but there are certain limits in place. The government has set a limit of £2000 per year that you can invest into an ISA, and this includes any other ISAs you may have such as a Cash ISA or Stocks & Shares ISA. With this in mind, you need to decide how much of your £2000 ISA allowance you want to use for a Property ISA.

There are also limits on how much you can borrow against your property. The government has set a maximum LTV (loan to value) limit of 80%. This means that if you have a mortgage on your property, the outstanding mortgage balance must not be more than 80% of the property value.

Does a Property ISA Earn Interest?

A Property ISA does not earn interest. The account is used to purchase a property and the funds are held in trust by a solicitor until completion.

Do You Pay Taxes On a Property ISA?

You do not pay tax on a Property ISA. The account is used to purchase a property and the funds are held in trust by a solicitor until completion.


About Jermaine Hagan (The Plantsman)

Jermaine Hagan, also known as The Plantsman is the Founder of Flik Eco. Jermaine is the perfect hybrid of personal finance expert and nemophilist. On a mission to make personal finance simple and accessible, Jermaine uses his inside knowledge to help the average Joe, Kwame or Sarah to improve their lives. Before founding Flik Eco, Jermaine managed teams across several large financial companies, including Equifax, Admiral Plc, New Wave Capital & HSBC. He has been featured in several large publications including BBC, The Guardian & The Times.

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