LISA0096

Written evidence submitted by Anonymous

My name is xxxxxx, and I am a 30-something born and bred Londoner. I am submitting evidence because having first opened my LISA 6 years ago, I am finding it to be the thing that is holding me back from doing the very purpose it was created for. Owning a first home is something that has been a goal for a lot of people in my generation, yet I know from speaking to my peers it feels like a lot of us are resigned to feeling like it won’t be something that happens until retirement. We have been waiting for administration after administration to make a meaningful difference to find a way to help first time buyers especially in London.

My partner and I have been dreaming of owning our first home for years. Like so many others in London, we’ve worked hard, saved diligently, and sacrificed to be in touching distance of that dream. But as we get closer to the point where we should be able to buy, we’re finding that the system—the very schemes designed to help people like us—feels like it’s set up to fail us.

The Lifetime ISA (LISA) was supposed to be a way for young people to save for their first home with the government’s support which sounded great. We dutifully opened them up, hopeful that at last there was some hope of home ownership for millennials. I confess that when I first opened mine 6 years ago, home ownership felt very far away and I was more drawn in by the 25% bonus the government would give. So, I contributed every year to get the bonus and thankfully both mine and my partners’ LISAs are now at the point of being a healthy deposit. Last year we made the decision that we were in a position to be able to look to buy our first home and that’s when all the trouble hit.  After months and months of researching locations, homes and viewing different options, we finally found one that fit into our criteria of what we wanted. After a stressful and gruelling process, it eventually went to a bidding war between us and one other. We gave our best and final offer of £450k as that is the cap we are limited to, explaining to the agent that we couldn’t go higher without losing a significant chunk of our deposit. The winning bid went for £455k, which really felt like a sucker punch to us. The very LISA that was supposed to help us find our first step onto the property ladder was the very thing holding us back in what is a very competitive London housing market.

We are currently in the process of reevaluating what we can and should do in our property search. London is home to us, not to mention our work and social lives are all based here so moving miles out doesn’t feel like a viable option, but not only is it not viable, it’s categorically not what we want to do. We absolutely love London. We love the variety it offers, the buzz and the opportunity of the place, but also for me, it is where I was born and grew up so to be pushed out is very difficult to take. But even more so because it feels like it is happening because of the £450k cap. We have a very healthy deposit of around £150k but £80k of that is in our LISAs. So we have the dilemma of what to do with the LISA money. If we withdraw it, we lose more than we had put in there in the first place so our deposit is smaller, not to mention losing interest for potential retirement which is the only other thing it could be useful for. If we ignore the LISA pots entirely and don’t put them towards the deposits then we lose a big chunk of our deposit and can’t go above £450k anyway.

I wish I knew when I was younger that this scheme wouldn’t be worth it, I could have kept my money out of the LISA and wouldn’t be bound to the outdated £450k mark and could potentially have already started my first step of being on the housing ladder. I would have been able to gather interest on it (which I lose if I take it back) and I wouldn’t be limited to a value that quite frankly is not fit fur purpose in London.

We’re not alone in this. There are thousands of people in London, just like us, who are ready to buy but are being held back by a scheme that hasn’t kept pace with reality. The £450,000 cap hasn’t changed since 2017, despite property prices in London constantly increasing. It’s not fair to expect first-time buyers to squeeze into a limit that doesn’t reflect the actual cost of housing in the city. To find somewhere that suits our needs and be constrained to £450k leaves you with either a shoebox or going outside of London. We have the money to find something that suits our needs yet can’t seem to use it due to the legislation. So we are stuck in dead end renting and paying someone else’s mortgage for a while longer it seems.

We need change. We need the government to raise the property price cap to something that reflects London’s unique housing market. A cap of £600,000 would make a world of difference, allowing people like us to use the LISA for homes that are actually available and suitable. Although it feels disgusting to have to pay that for a first home, we accept the reality of the chronic lack of housing left by the previous government, as well as the fact that London has always had a housing issue. However, what feels much harder to accept is that the scheme that was setup to help people just like us is suddenly holding us back. Please make changes to it.

January 2025