LISA0182

Written evidence submitted by James Naish MP

OVERVIEW

The Lifetime ISA is a valuable tool for helping first-time buyers save for their first home. However, the current property price cap of £450,000 is proving restrictive in areas with high and increasing house prices such as Rushcliffe in south Nottinghamshire.

I am writing to advocate for the Lifetime ISA to continue and propose a moderate increase in the £450,000 cap to ensure that first-time buyers in high-demand, low-supply areas are not excluded from the scheme’s benefits.

THE CASE FOR INCREASING THE LIFETIME ISA PROPERTY PRICE CAP

1. HOUSE PRICES IN RUSHCLIFFE
 

Rushcliffe is a desirable area to live and, as a result, has comparatively high house prices. Recent data shows that in 2023:

• The mean price of houses sold was £378,331.
• The median price was £340,000.

25.5% of property transactions (433 out of 1,697) were over £450,000. This percentage is likely to include more and more first-time buyers as property prices increase. In 2021, for example, Rushcliffe experienced annual house price growth of 22%, the third highest in England. As house prices increase, the £450,000 cap may become insufficient for first-time buyers in Rushcliffe and elsewhere.

2. FIRST-TIME BUYER AND ISA USAGE IN RUSHCLIFFE
 

The following statistics highlight the importance of ISAs in the area:

• Between December 2015 and June 2024, 875 property completions in Rushcliffe were supported by Help to Buy ISAs.
• Nationally, the Help to Buy ISA has been phased out, leaving the Lifetime ISA as a key vehicle for first-time buyer support.
• Data on Lifetime ISA usage at the constituency level is unavailable but anecdotal evidence from individuals and property agents suggests growing reliance on this product among first-time buyers.

3. INCREASING DEMAND AND LIMITED SUPPLY

Between 2018/19 and 2022/23, Rushcliffe added a net total of 4,039 new homes with 3,909 being new builds. However, demand continues to outpace supply, exacerbating affordability pressures. The limited availability of homes below £450,000 highlights the inadequacy of the current Lifetime ISA cap.

SUPPORTING FIRST-TIME BUYERS

1. RAISING THE LIFETIME ISA PROPERTY PRICE CAP

The current £450,000 limit, set in 2017, has not kept pace with house price inflation in areas like Rushcliffe. Adjusting this cap to reflect local conditions would ensure that first-time buyers can fully benefit from the scheme. For example, setting the cap closer to £500,000–£550,000 would better align with property prices in high-demand areas.

2. IMPROVING DATA TRANSPARENCY

There is limited publicly available data on:

• The proportion of first-time buyers in constituencies like Rushcliffe.
• The number of homes purchased using Lifetime ISAs at the local level.
• National and local data on withdrawal reasons for Lifetime ISAs.

Publishing more granular data would enable better policy targeting and evaluation.

3. EXPANDING SUPPORT FOR FIRST-TIME BUYERS NATIONALLY

National statistics show that affordability remains a major barrier for first-time buyers. Campaign for Better Transport data highlights that financial assistance programs, like the Lifetime ISA, play a critical role in promoting homeownership.

CONCLUSION

The Lifetime ISA is still an important tool for first-time buyers, but its effectiveness is limited by the outdated property price cap in areas like Rushcliffe where house prices are high and increasing. Extending the product and adjusting the cap would better reflect the realities of the housing market in 2025 and ensure more first-time buyers can access much-needed support. I would, therefore, like to encourage the Treasury Select Committee to consider increasing the property price cap for Lifetime ISAs to at least £500,000.

Thank you for considering this evidence.

February 2025