Source · Select Committees · Treasury Committee
Recommendation 5
5
Accepted
Analyse Lifetime ISA effectiveness to support first-time buyers before increasing the house price cap.
Recommendation
The house price cap for the Lifetime ISA ensures that Government spending supports those who need financial assistance the most. Any increase in the price cap is an increase in Government spending. Before considering any increase in the house price cap, the Government must analyse whether the Lifetime ISA is the most effective way in which to spend taxpayers’ money to support first-time buyers. (Conclusion, Paragraph 65) 45 Retirement saving with the Lifetime ISA
Government Response Summary
The government defends the current Lifetime ISA property price cap as well-targeted for first-time buyers and states that its comprehensive data collection and research continuously inform policy decisions, thereby inherently analysing effectiveness.
Government Response
Accepted
HM Government
Accepted
The LISA encourages younger people to save towards later life at the same time as being able to save for their first home. In particular, the Government recognises the historically high gap between house prices and earnings and has made it a priority is to support first time buyers. As of 2023/24, there were over 1.3 million LISA accounts open and, since its introduction in 2017, the LISA has helped 227,600 people purchase their first property. To ensure the product is well targeted, the property price cap (£450,000) supports most first-time buyers across the UK, including those households who may find it difficult to get onto the property ladder, which the Committee’s report has acknowledged. In addition, the withdrawal charge ensures that the LISA has been used for its intended purposes: homeownership for first time buyers or later life savings. The Government collects comprehensive data on LISAs. This includes published Annual savings statistics, the most recent being from September 2024. HMRC shared further data on LISAs with the Committee in the letter dated 9 April 2025, including LISA market value, number of LISAs open, opened and closed in each tax year, and number of individuals incurring withdrawal charges. HMRC also shared data with the Committee in the letter dated 30 April 2025, including a regional breakdown of house purchases, the number of bonuses paid and authorised withdrawal sizes. Finally, HMRC has undertaken and published qualitative research on LISA users which explores their experiences, and on non-users to understand what the barriers are for eligible individuals. The research and data inform the Government’s policy decision making. The Government keeps all aspects of the Lifetime ISA policy under review and carefully considers all representations received.