LISA0155

Written evidence submitted by Anonymous

Introduction:

I am submitting this evidence as an individual who has actively saved into the original Help to Buy (H2B) ISA and has researched the LISA scheme extensively. The significant disparities between these schemes, particularly regarding property price caps, are hindering first-time homebuyers. This submission outlines these disparities and proposes solutions to create a fairer system that effectively supports aspiring homeowners.

Previous Advocacy:

I have previously written to the Prime Minister (copy attached) outlining my concerns regarding the H2B scheme's limitations. In that letter, I detailed how the £250,000 property price cap effectively locks me out of the market, despite diligent saving. This personal experience underscores the urgent need for reform and highlights a critical issue that should be considered in the context of the LISA review.

Current Situation and Disparities:

As highlighted in my letter to the Prime Minister, many individuals, like myself, diligently saved into the H2B ISA, only to find that the £250,000 property price cap (outside London) now severely limits its usefulness due to rising house prices. The average UK house price, according to Halifax, is now £297,166, which significantly exceeds the H2B limit. Meanwhile, the LISA offers a higher property price cap of £450,000, which, while an improvement, may still be insufficient in some areas. This creates a significant disparity. Those who started saving earlier with the H2B are now disadvantaged compared to those who were able to utilize the LISA from its inception.

Transferring from the H2B to the LISA is also problematic due to the annual contribution limit of £4,000, which makes it a slow process and can take many years. My own savings journey, as described in my letter to the Prime Minister, illustrates this challenge. The restrictive transfer rules between H2B and LISA highlight a potential flaw in the LISA structure itself, which should be addressed in this review.

Impact of Stamp Duty Changes:

Recent stamp duty changes further exacerbate the challenges faced by first-time buyers, even those using a LISA. The increased costs can negate the benefits of the LISA bonus, making it crucial for the review to consider the interplay between the LISA and stamp duty to ensure that government support is not offset by increased costs.

Recommendations:

To address these issues and create a fairer system for aspiring homeowners, I urge the

Treasury Committee to consider the following:

1. Facilitate Seamless Transfers: Those with existing H2B ISAs should be allowed to seamlessly transfer their entire savings into a LISA without being subject to the

LISA0155

annual £4,000 contribution limit. This would allow individuals to benefit from the potentially higher property price cap of the LISA without significant delays.

2. Equalize or Increase House Price Caps: The property price caps for both the H2B and LISA schemes should be equalized or, preferably, increased to reflect current average house prices in different regions. This would ensure that both schemes effectively support first-time buyers in the current market.

3. Review the Combined Impact: The Treasury Committee should assess the combined impact of LISA/H2B incentives and stamp duty changes to ensure that government support genuinely benefits first-time buyers and isn't offset by increased costs.

Conclusion:

The evidence presented demonstrates the urgent need to address the disparities between the H2B and LISA schemes, particularly in the context of the current LISA review. I urge the Treasury Committee to consider the recommendations outlined above to create a more equitable and effective system that truly supports first-time buyers in achieving their homeownership aspirations.

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xxxxx xxxxx 8 July 2024

Your Ref : My Ref : PM1 - 8/7/2024

Dear Prime Minster

I wanted to start by congratulating you on winning the General Election.

I am writing to you regarding the Governments Help to Buy schemes.

I am 28 years old and currently live at home with my family. I have been saving in the original Help to Buy (H2B) scheme since it started.

I have diligently saved £12000 and have been looking to buy a new home in the local area.

However, under the rules, to benefit from the scheme I can only buy a new home up to £250,000. The houses around here are more than this and the average house in the UK is now costing £288,949 – according to the latest Halifax price index.

The property price limits have not risen since its introduction and have not been linked to inflation.

If I had saved in the latest Help to buy scheme (LISA) the limit would have been £450,000.

I have looked into transferring to the latest scheme – but with the paying in limits this would take 4 years to happen.

I think there is a disparity between the schemes and those on the later scheme are more favourably treated.

I know I have the option to withdraw my money but I would then lose the interest incentive.

My reason for writing to you is, if you want to effect changes to those buying their own homes then would you and the government consider these options:

1) Increase the limits to be equal

2) Amalgamate both schemes or allow those in the first one to transfer to the second without penalty and instantly transfer the whole amount saved

I hope you will consider this for review, and look forward to hearing from you.

Yours sincerely