LISA0067

Written evidence submitted by Anonymous

I am writing, with a sincere heart, requesting that you reconsider the current status of the Lifetime ISA (LISA)/ Help to Buy LISA (HTB ISA) rules which are costing my partner and I, as well as many other first time buyers around the country, the opportunity to get onto the property ladder and buy our first home.

My concern is that the LISA/HTB ISA, designed to assist first time buyers like myself, is not fit for purpose given the market conditions which are making it increasingly challenging to buy a first home in our country.

By way of background, I opened my LISA 7 years ago, back when I was 18 years old and starting higher education at the xxxxxxxxxx xxxxxxxxxxxx. With careful diligence I have always made an effort to save whenever possible and have made sure to place these savings in my LISA, with a view to benefit from the generous 25% bonus from the government each year in the hope that, one day, I would be fortunate enough to buy my first property. My fiancé and I moved down to Hertfordshire in August 2024, having worked hard to secure jobs in London. Having not been able to afford to buy a home to date, we continue to rent, with most of our salaries going on this expense. We have both worked extremely hard to get ourselves into the position we are today and have had the aim to buy our first home in 2025/2026: a home that we hoped would be a modest one and one in which we could comfortably bring up a child in a safe and happy space. As I enter my late twenties, in a solid relationship and at the beginning of an exciting career, I have started to give more thought to my future, which has involved, understandably, looking to buy our first home. Until recently I had been under the false assumption that I would have my LISA to rely on to assist with the cost of a deposit for a home. However, as you can imagine, I was greatly dismayed when I discovered that you can only use a LISA/HTB ISA on a qualifying property, which is one worth up to £450,000.

We live in Hertfordshire, where the average property price is £529,377. Three bedroom terraces are currently averaging £630,000- an already hefty price for a home, let alone a first home. We are not expecting to buy a mansion, just somewhere to live comfortably, somewhere that is ours, and have enough space to raise a family. As a result of the LISA/HTB ISA cap, many first-time buyers will be ineligible to benefit from it. As Martin Lewis stated in his open letter to the government back in January this year, the £450,000 limit has remained frozen since the LISA launched in 2017 yet average house prices have risen more than 30% in that time. If the cap had risen in line with this growth, it would now be approximately £600,000. Yet nothing has changed. Based on the current LISA rules, the only opportunity I (and many many others) now appear to have to withdraw without penalty is when we are over the age of 60, ultimately leaving us with no choice but to withdraw sooner as this is the money we will have saved with the intention of purchasing a first home.

I was relieved to say the least when Labour came into power this summer, “finally, a party that will fix the housing crisis our generation faces”, I thought. Surely it is in the Government’s best interest to make homes affordable for young people. From working in the Pensions industry, I am acutely aware that we face a looming crisis. We are nearing an age whereby one’s outgoings in retirement could very well exceed one’s pension provision. This, in large part, is due to the fact that the cost of renting has not previously been factored into retirement to the extent it will need to be if things do not change. There has been a long standing assumption that most people would be able to pay off their mortgage by the time their working life comes to an end. This will not be the case for my generation, and future generations, if this broken system is not fixed.

Although I feel I have more to say, I know you are extremely busy and therefore I hope that the sentiment of this letter has been articulated in the words I have already typed. I urge you, with the Spring Budget on the horizon, not least for individuals like myself, but for the benefit of society as a whole, to consider amending the outdated LISA/HTB ISA rules to give our generation a chance at being able to afford our first homes in a world where the opportunity to do so is feeling increasingly more elusive.

January 2025