LISA0135
I am a PhD student at Cambridge University. Cambridge is one of the most expensive cities in the UK for housing. I rent a two-bedroomed, two-up, two-down terrace with my partner for 1,750 pcm. Incredibly, this small house is worth £700,000.
I would like to buy a house after my PhD and have saved hard to do so, including working multiple jobs alongside my PhD. This includes saving the maximum amount into the LSIA for four years.
The £450k cap presents significant challenges for buying in Cambridge, effectively ruling out anywhere in the city that might be suitable for a small family. Even a 100k rise would be a significant difference.
Fundamentally, the purchase price limit needs to be increased or scrapped. I fail to see why it has not been removed already. If the government thought £450k was an appropriate amount in 2017, I fail to understand why this sum remained the same despite national house prices of 33% in that time.
Another option would be to reduce the withdrawal penalty as it is greater than that simply needed to recoup the government bonus. On £20,000 saved, the 25% bonus is £5,000, but the withdrawal penalty is £6,250, so I would end up with £1,250 less than I contributed. This seems unfair.
I am sure it is a useful product in many parts of the country. But the reality is that in many cities in the South of England, including Oxford and Cambridge, it is simply unworkable.
I note that the Chancellor has heralded Oxford and Cambridge as the two pillars of a new growth corridor. Whilst I am sure this would be fantastic, the 450k cap threatens the viability of this. There is a real risk for brain drain from the area.
January 2025