OneFamily has been campaigning for several years for the lifetime ISA (LISA) to be reviewed, to make it more attractive to savers.
So, we're pleased that a consultation has just been launched by the Treasury Select Committee and we'll be putting forward our point-of-view on behalf of our customers.
Lifetime ISAs are designed to help people aged 18-39 save for their first home or build savings to be used after the age of 60.
You can pay in up to £4,000 each tax year, and the government will top up whatever you pay in by 25%. This means there’s up to £1,000 of bonus money available each year; which is potentially game-changing for people saving for their first-home deposit.
We believe that, with some adjustments, LISAs could help to kick-start the UK’s first time buyers’ market.
Currently, the home you buy with a LISA must not cost more than £450,000. We think this limit needs to be re-evaluated, since the house price cap was set in 2017 and the cost of homes has risen dramatically since then.
Secondly, if savers need to dip into their nest egg in an emergency then they're hit with a penalty of 25%.
So, you don’t just lose the bonus but also a chunk of the savings as well – we know from talking to our customers that this is something that puts them off saving in a LISA – despite the advantages of the bonus.
By updating the LISA, it could become an essential tool in helping the next generation to move out of rented accommodation and into the stability of their own homes
Jim Islam, Chief Executive Officer, OneFamily
We look forward to seeing the outcome of the review – watch this space.
Further information on the review is available on the Treasury Committee’s website.
