LISA0005

Written evidence submitted by Anonymous

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A bit of background about me: I am 27 years old, and like many others in my generation, I am struggling to afford my first property. I have sacrificed a great deal to save every penny, and I am now close to having a sufficient deposit. I am fortunate to live with my parents and save, something I know many people my age are not able to do.

My parents are over 70, and I am increasingly responsible for their care. It is crucial for me to purchase a property close to them, as I will need to check in on them regularly and assist with their needs. Unfortunately, living in the South within the London commuter belt has made it extremely difficult to find a property under £450,000 in their area.

I originally set up a Lifetime ISA based on the Government’s recommendation that it was the best way for first-time buyers to save for a home. At the time, I didn't foresee the issue with the property price limit. However, with house prices rising significantly, I am now in a situation where I am penalized for diligently saving and using the Government’s scheme for its intended purpose. If I buy a property above the limit, I face a 6.25% penalty on my savings (as outlined by Martin Lewis below).

Despite repeated calls over the years to review the Lifetime ISA, particularly considering the Conservative government introduced it, no action has been taken in seven years since. I understand that Labour may have other priorities, but reviewing the Lifetime ISA would not be a costly move and would greatly benefit people like me who are trying to purchase a home through this scheme.

Martin Lewis has provided suggestions for reforming the Lifetime ISA, with the simplest solution being to increase the £450,000 limit in line with the 40%+ rise in house prices since the scheme was launched. This change would not cost the Government anything and would be a much-needed relief for young people in the South.

I would greatly appreciate if this could be raised at an upcoming PMQ's or equivalent, so Rachel Reeves and the Government are aware that this is a Government facility that is unfit for purpose and must be reviewed as soon as possible. The longer it remains in its current state, the more our generation is punished as a result.

Thank you for your on-going representation and for considering this request.

January 2025

Sources:

https://www.moneysavingexpert.com/news/2024/09/lifetime-isa-fines-costing-first-time-buyers/

https://www.moneysavingexpert.com/news/2023/january/lifetime-isa-change-needed-savers-locked-out/