LISA0094

Written evidence submitted by Anonymous

Why the current LISA regulations are not fit for purpose

My son is in the process of buying his first home. As parents, we added money on a regular basis, as did he, to his LISA, on the understanding he would receive 25% interest on buying his first home.

He has worked extremely hard to build up his own business to a point where he can just about afford a property in London, something he is determined to do to avoid the exorbitant rental charges. The property he is buying is a basic, one floor flat-a typical first time buy. But the cost, being London, is £520,000. This is no mansion, it is a simple, basic property.

The reward for his hard work and our saving is to have money actually TAKEN AWAY from him because the property is over the £450,000 LISA limit. When I found out there was a 25% penalty for not using the LISA to buy a property under the stated limit, I thought it must be a mistake. Why would you take money away from young house buyers at a time when it’s incredibly hard for youngsters to buy their first property? It is disgraceful.

I understand that if the LISA is not spent on a property there might not be the full 25% interest applied but to take money AWAY is just wrong. For the government to be doing this is scandalous.

The £450,000 limit was set in 2017! Why on earth has this not been index linked to house price inflation to make it appropriate for the current housing market?

To conclude:

1)      The house price limit should be set high enough to reflect current property prices, especially in London.

2)      Hard earned money should not be TAKEN AWAY from youngsters who need every penny. At the very least, they should retain all the money they have paid in to their LISA but preferably they should have some (even if, reduced) interest applied to what they have saved if, for whatever reason, they are unable to purchase a property.

A further question to consider:

Will people like my son, who have lost money through no fault of their own, be compensated when you have rectified the rules, as I’m sure you will?

January 2025