LISA0138

Written evidence submitted by Anonymous

Introduction: I have a LISA with £30,000 in it which I have been putting the maximum amount into every year to save for a mortgage deposit. I live in Bristol where the average house price is over £370,000. When the LISA cap was set the average price was around £260,000. I'm concerned that if I'm not able to buy in the next few years then the cap will make it difficult to buy a house using the money in my LISA. My savings outside of the LISA are limited so I am extremely reliant on being able to use this money on a house as otherwise I will have to choose between locking myself out of the housing market for several extra years to save the deposit again in another savings product, or taking the significant financial hit of the withdrawal penalty.

1. Is the Lifetime ISA fit for purpose in its current design, including as a combined product for house purchase and pension saving?

It nominally provides a good incentive to save money specifically for a mortgage deposit. However I know several people who are put off using it by the price cap.

2. How well do consumers transition between using the Lifetime ISA as a product for house purchase, to then a product for pension saving?

I don't know. I'm not indending to use it as a pension product after buying a house.

3. Given its policy purposes, is the Lifetime ISA value for money for the Government?

No strong feelings.

4. Is the Lifetime ISA a suitable pension savings product?

No strong feelings.

5. Should the Lifetime ISA be abolished?

If the price cap isn't increased or the penalty for withdrawing money removed then it will become useless in large parts of the country in a small number of years.

6. Should the Lifetime ISA be reformed to remove the withdrawal penalty?

If the price cap isn't increased then yes, otherwise probably not.

7. Should the Lifetime ISA be restricted to those with no access to a workplace pension?

Given I believe it's primarily used to save for property, no.

8. Should the Lifetime ISA house price cap be raised in line with inflation, or removed?

Raising in line with house price trends in the more expensive parts of the country seems fairest given the fact that for it be a significant contribution towards a deposit requires several years of contributions and many people will be unable to predict where they are likely to want to buy a property.

9. Should the annual Lifetime ISA limit be raised from £4,000?

Raising in line with inflation or house prices would seem reasonable. However given the cost of living many people are not going to be able to commit more money a year anyway.

10. Should the Lifetime ISA be reformed in any other way?

No strong opinions.

February 2025