Ahead of the upcoming Spring Budget, and in the shadow of much speculation surrounding potential Stamp Duty reform, OneFamily has called for changes to be made to lifetime ISA (LISA) processes.
Citing “unfair penalties” and an “outdated price-cap”, the LISA provider has urged the Government and the Chancellor to implement reform as part of the Spring Budget announcement.
Jim Islam, CEO at OneFamily, said: “We urge the government to support first-time buyers by reducing the unfair lifetime ISA penalty and updating the outdated house price cap in this year’s Spring Budget.
“The lifetime ISA is an excellent product that supports people who want to buy their first home, with up to an extra £1,000 bonus every year. But given the rise in property prices, more needs to be done to provide additional support.”
He added: “We are calling on the government to reduce the penalty lifetime ISA holders pay when withdrawing savings from their account for any purpose other than buying a first home or retirement from 25% to 20%.
“This would mean savers would not lose out on their own investments when using the money for another purpose, particularly as people may have been forced to turn to their savings unexpectedly due to the cost-of-living crisis.
“The £450,000 cap – the maximum value of a property that can be bought using a lifetime ISA – was set when the product was launched in April 2017. The cap has not kept up with the rise of property prices in recent years.
“We urge the Government to increase the cap so people are not hit unfairly by the penalty and to commit to reviewing this regularly in line with house prices.”
