LISA: Don’t throw the £2bn baby out with the bathwater

A shift in the LISA price cap would be incredibly welcome. Runaway house price rises over the past five years have rendered the £450,000 limit much less generous than it was back in 2018.

While you can still stretch to the average UK property – costing £291,000, Londoners would find the average home well out of reach, at £536,000.

If you want to buy somewhere more expensive, you’re hit with a punitive 25% penalty – eating into your deposit at a time when you can least afford it.

Pushing up the limit, and ensuring it keeps pace with house prices in future, would be eminently sensible.

It should go hand-in-hand with a cut to the penalty to 20% – so essentially all you’d lose if you bust the budget would be the Government bonus.

More rumours of yet another ISA are worrying. If the plan is to simplify and streamline the range, adding more different types of ISA risks bringing another layer of complexity.

The LISA has helped over 171,000 people onto the property ladder, supporting deposits of £2bn.

It has also helped hundreds of thousands start their savings and investment journey, forming habits which will help them build their resilience over the longer term. That’s not to be sniffed at.

The Treasury doesn’t need to throw the baby out with the bathwater. Some tweaks to the LISA will give a huge head start to anyone saving for a property or for retirement.

Sarah Coles is head of personal finance at Hargreaves Lansdown: