LISA0212

Written evidence submitted by Skipton Building Society

Skipton Building Society Additional Evidence for the Treasury Committee Call for Evidence

Further to the evidence provided on 4 February 2025 Skipton Group, led by Skipton Building Society, launched the second edition of the Skipton Group Home Affordability Index on 19 February, in partnership with Oxford Economics.

The Skipton Group Home Affordability Index is a unique tool that harnesses data from across Skipton Group businesses, the Office for National Statistics, and the Bank of England to provide fresh insight into the affordability challenges faced by renters, first-time buyers and homeowners by age, income, geography, and family-type.

The second edition of the index analysed data from across 363 local authority areas in Great Britain, which forecasts that, by the end of 2027, the Lifetime ISA house purchase of £450,000 will fall below the average first time buyer property price in 12% of local authorities in England.

The following charts show how the house purchase price limit is impacting the use of the LISA for first time buyers in some local authority areas and how this impact would be reduced if the house purchase price limit is increased to either £500,000 or £550,000.

Chart 1: Proportion of local authorities in England where the average first-time buyer price is over the Lifetime ISA house purchase price limit 

Source: Skipton Group Home Affordability Index, February 2025

Chart 2: Proportion of local authority areas in Great Britain where the average first-time buyer house price exceeds the LISA threshold over time.

Source: Skipton Group Home Affordability Index, February 2025

The data from the latest Skipton Group Home Affordability Index shows that there is a risk that the LISA will no longer fulfil its intended purpose of helping first-time buyers onto the housing ladder in a significant and growing number of local authority areas.

This is against a backdrop of average house prices increasing by more than 32%[1] since 2017, while the LISA house purchase price limit has remained unchanged.

Our analysis provides compelling evidence that the purchase price limit needs to be raised to a minimum of £500,000 to ensure the LISA remains relevant for those it is designed to help.

In addition to the increase in the house price limit, in our original evidence we also set out that we believe the LISA proposition would benefit from:

• A reduction to the unauthorised withdrawal penalty from 25% to 20%, ensuring that LISA savers are not losing capital as a result of changing circumstances.
• The LISA age limit being increased from the age of 40 to enable more people to consider the LISA as an option for retirement planning. 

We look forward to discussing this further with Treasury Committee members.

February 2025