LISA0139
Written evidence submitted by Anonymous
I am a 25 year old resident of Bristol, soon to be married and looking to purchase my first house within the next 5 years. I have been saving into a LISA for the last 6 years, having had a Help To Buy account prior to that which I closed in favour of the LISA due to the LISA allowing me to buy a higher value property. Being from a low income background, I will have no financial support from my family to purchase a property and without the government bonus I would likely not be in a financial position to get on the property ladder. I am submitting evidence as I have concerns about the property price cap, as I feel that it is no longer appropriate what with rising house prices and may make the saving I have done into the LISA not worthwhile.
1. Is the Lifetime ISA fit for purpose in its current design, including as a combined product for house purchase and pension saving?
No. The cap on the house purchase price renders the product unsuitable for first time buyers in certain regions of the country looking to buy a property suitable for a family, due to the rapidly increasing house prices and the withdrawal fee.
2. How well do consumers transition between using the Lifetime ISA as a product for house purchase, to then a product for pension saving?
No strong opinions.
3. Given its policy purposes, is the Lifetime ISA value for money for the Government?
No strong opinions.
4. Is the Lifetime ISA a suitable pension savings product?
No strong opinions.
5. Should the Lifetime ISA be abolished?
I feel strongly that the LISA should not be abolished, as I think that government contributions for those saving to buy their first house are incredibly worthwhile and can be of great value to those who might otherwise never consider attempting to get onto the property ladder.
6. Should the Lifetime ISA be reformed to remove the withdrawal penalty?
If no changes are to be made to the price cap on the first-time house purchase, then the withdrawal penalty ought to also be reformed such that those who are priced out of house purchase do not suffer. Particularly given the home has to be lived in after purchase, those who need a larger property or who want to buy a house with the intention of starting a family there may be unable to do this under the current price cap due to the house pricing situation (refer to my answer to Q8 for more on this).
7. Should the Lifetime ISA be restricted to those with no access to a workplace pension?
No, due to its purpose of helping first-time house buyers.
8. Should the Lifetime ISA house price cap be raised in line with inflation, or removed?
Either of these options would be better than the current situation. When the LISA was introduced, the average house price in Bristol was around £248,000 (May 2016) but that has since risen to over £360,000 (Nov 2024) [source: UK House Price Index]. According to RightMove, in the last year semi-detached properties sold for an average of £428,164. As someone looking to use my LISA savings to buy a property, this is massively concerning to me. The fixed cap of the LISA means that I may not be able to purchase the type of home I’d be looking for, and then the inability to take out my money without incurring the withdrawal penalty would mean that my using of the product would not only have been pointless but also put me in a worse position than if I had made other investments.
9. Should the annual Lifetime ISA limit be raised from £4,000?
No strong opinions.
10. Should the Lifetime ISA be reformed in any other way?
No strong opinions.
February 2025