Charlotte Harrison, CEO of home financing at Skipton Group, has called on the Government to implement key reforms to the Lifetime ISA (LISA) to better support first-time buyers, following her appearance before the Treasury Select Committee’s inquiry into the product.
Speaking after the session, Harrison said: “Skipton Building Society was the first provider in the UK to offer the cash Lifetime ISA in 2017, and today remains one of the largest LISA providers with over 160,000 LISA savers. Skipton has unique insights into the usages, successes, and foresight of the LISA product. LISAs have already been used in more 227,000 house purchases showing how the LISA is key to helping people into a home of their own. Given the growth in the appeal of LISAs we anticipate that there will be a significant increase in the amount of house purchases using a LISA over time.”
Harrison noted that 70% of Skipton’s LISA customers use the product to save for their first home, while just 12% use it solely for retirement.
She warned that affordability remains a major hurdle, with Skipton’s Home Affordability Index forecasting that the current £450,000 LISA house purchase limit will fall below the average first-time buyer property price in 12% of local authorities in England by 2027.
“Our analysis provides compelling evidence that the purchase price limit of the LISA needs to be raised to a minimum of £500,000 to ensure the LISA remains relevant for those it is designed to help,” she said.
Harrison also urged the Government to reduce the unauthorised withdrawal penalty from 25% to 20% and to raise the LISA age limit above 40 to make it a more viable retirement savings tool. “We believe that the LISA offers value for money for both the Government and individuals,” she said. “However, for the LISA to continue to be successful in supporting with this, we feel it’s vital that our LISA recommendations are heard today and considered by the Government.”
Harrison also addressed speculation around potential reductions to the cash ISA allowance, warning that such a move could hinder first-time buyer lending. “Building societies, who support more than 40% of all lending to first-time buyers, depend on retail deposits to fund mortgages,” she said, adding that most cash ISA savers are risk-averse and unlikely to shift to stocks and shares.
