LISA0161

Written evidence submitted by Anonymous

 

Seven years ago when my daughter was 24 years old, I encouraged her to save money in a LISA with a view to buying property in the future.  She is now 31years old and has saved £28,000, but due to high levels of house price inflation, combined with the house price cap, she is unable to use her LISA savings to enable her to buy a home.  She works in London and needs to buy within the London/greater London area where property prices are very expensive.

Therefore, she is stuck because she can’t use the money to try to buy a property as she will exceed the price cap, nor can she move her money to another form of savings as she will incur a large penalty for doing so.  We both feel very frustrated with the current situation, especially as this was created by the government to help young people to save and buy a home  and is actually impeding them from doing so.

I have attempted to answer the questions you have raised about this situation below:

  1. LISAs are currently not fit for purpose

 

  1. My experience is that consumers are not able to transition to house buying because of house price inflation.  I cannot comment on the situation with pensions

 

  1. I do not know if it’s value for money for the government, it isn’t value for money for savers looking to buy a home in the South East

 

  1. I do not know if it is a suitable pension product

 

  1. It doesn’t need to be abolished but it needs to be reformed

 

  1. Yes it should be reformed to remove the withdrawal penalty

 

  1. To restrict it to those without a workplace pension seems to me to be unnecessarily restrictive and complicated.  Young people’s pension status can often change. For example, my daughter is a freelance TV producer, but for long contracts, her employer contributes to her pension as part of automatic enrolment in the workplace

 

  1. The LISA cap should be removed. If you rely on setting the cap by the rate of inflation you risk making it too complicated

 

  1. It would be helpful to raise the LISA limit

 

 

  1. LISAs need to be completely reformed because they are no longer a practical way to help young people to save to buy a home.  They are too restrictive and punitive.  They do not acknowledge the reality of the housing market that young people have to negotiate today.  How can you have a product where you encourage people to save for a home, but when they try to access their savings they are penalised because of house price inflation.

 

February 2025