LISA0070

Written evidence submitted by Anonymous

The Lifetime ISA is fit for purpose, however, not at its current state. As a whole, this government scheme is an incredible opportunity for young people to begin saving for the long term and encourages us to think and save for our future. However, I believe the scheme needs to reflect on the current economy and house prices too.

Firstly, it is not fit for purpose in its current design in regards to the Lifetime ISA being used for first-time buyers. The rule of using the Lifetime ISA for first-time buyers only for properties of £450,000 or less does not reflect how much house/ property prices have gone up, especially in the South East and London. Therefore, I would suggest that this cap increases in-line with the housing market and inflation in order to make this goal attainable for first-time buyers.

A lot of young people utilise this government scheme as it is one of the best ways to save for a property. Additionally, without this scheme, lots of people would not be able to even fathom buying a property until very late into adulthood. Although we understand this scheme is for both saving for a pension as well as for a first-time property, this scheme is not the best way to save for a pension and thus, most people are likely to already have alternative pension plans, and thus eradicating this scheme would be counter-intuitive and disruptive, as well as hinder a lot of positives for a generation of people who cannot afford a property without this scheme.

In addition, if the maximum amount of a property a first-time buyer can buy, of £450,000 does not increase, then a lot of people may feel forced to purchase a property rashly and without proper evaluating. Thus, making a lot of people make poor decisions on big matters in order to be able to purchase just something with their Lifetime ISA so as not to feel like it is wasted as property prices keep rising. Therefore, if annually increasing this capacity is too difficult, too time-consuming or complicated, then removing the price cap may be beneficial and most efficient.

Furthermore, the withdrawal policy is understandable as with any type of banking. However, it may be beneficial to lessen the penalty in order to ease people into joining the scheme.

The idea of limiting this scheme to those who do not have access to a workplace pension would be detrimental to the economy and community. Regardless of having access to a workplace pension, this scheme is not the best for pension savings - this is even backed by Martin Lewis, Money Savings Expert - and would extremely hinder any first-time buyer with a workplace pension to ever try and afford a first time home.

Finally, on the point of the £4000 saving limit, this is a great number to work with so that people feel like it is attainable and able to save this amount each year. However, it could be increased as to encourage further savings as well as cater to those who can save more and would like to, especially for those who get interest or are on a stocks and shares Lifetime ISA as then they can manage their money and learn from this too.

In conclusion, I think it is imperative to keep this scheme, however it does need to be modified, as some of the rules are outdated and need to change with the current economic influxes and reflect inflation and the needs of society in every aspect. Overall, it is a great scheme to help encourage everyone from all different backgrounds to save for the future and helps them plan their life as well as lifestyle, therefore, making it important to keep, constantly evaluate to improve and promote.

January 2025