LISA0175

Written evidence submitted by Anonymous

I opened my LISA account in September 2020, aged 25 as someone who knew I would want to purchase my first property in a few years time. I transferred across the savings I had in my Help to Buy ISA and closed this as the LISA account seemed like a better option at the time.

I live just outside of London and since I opened my LISA house prices have gone up at least 20%. Effectively this means that in 2020 we would have been able to purchase a small 2-3 bedroom end of terrace property for under £450k but now these houses cost over £500k.

Now, as I approach 30, my partner and I would like to purchase our first property. Despite saving £1000s into our LISA accounts we realised 2 years ago that the £450k limit and subsequent 25% penalty were likely to prevent us from buying a suitable property in the area we live in and have since abandoned saving into the LISA accounts, meaning we've already lost out on years of potential 'bonuses' should the scheme be fixed.

The scheme was introduced to help first time buyers get on the ladder so it seems unfair that some of the people facing the highest house prices in the country (in London and the South East) are being priced out of the schemes which were supposed to help them. Not only that but they're also losing their hard earned money and any interest gained. The fact that we are effectively worse off due to having chosen to save into a scheme designed to help us seems to indicate that it's not fit for purpose.

My main issues with the scheme are this -

- The £450k cap which wasn't index or inflation linked and hasn't changed since the scheme began is unfair for those who happen to live and work in some of the most expensive parts of the country.

- The penalty for withdrawing money being set to 25% means not only losing the bonus and interest but also losing some of the money we originally contributed.

February 2025