OneFamily has renewed its call for reforms to the lifetime ISA, urging the government to raise the £450,000 property price cap and adjust the withdrawal penalty as first-time buyers continue to face difficult market conditions.
The cap, unchanged since the LISA launched in 2017, has failed to keep pace with rising house prices. The provider argues that this is significantly limiting the product’s relevance in several parts of the country, particularly in higher-value regions.
New research by OneFamily suggests that an increase in the cap would make the product more attractive to potential savers. In a survey of 2,000 adults aged between 18 and 40, 41% of those without a lifetime ISA said they would be more likely to open one if the cap were raised in line with house price growth. This represents an estimated 7.1 million people.
The survey also indicates that the current withdrawal penalty remains a deterrent. Among adults who said they would not consider a LISA, 21% cited the penalty as the reason, the equivalent of more than one million people.
Jim Islam, chief executive of OneFamily, said: “Hopeful first-time buyers are facing enormous challenges. High property prices, rising rents, and the increased cost of living are making it harder than ever to save for a deposit.
“The Lifetime ISA offers a vital lifeline, giving savers a 25% government bonus that can make a real difference.
“We’ve seen the positive impact LISAs can have on young people’s lives first-hand – in the 2024/25 financial year alone, it helped nearly 90,000 people buy their first home.
“But given the scale of the difficulties they face, it’s clear that more needs to be done. We’re calling for the withdrawal penalty to be adjusted and for the £450,000 property price cap – unchanged since 2017 – to be increased.
“These changes are the right thing to do and would support people in taking that crucial first step onto the housing ladder.”
OneFamily said its research reflects the growing mismatch between the structure of the LISA and the realities of today’s market, with young buyers squeezed by affordability pressures and rental costs that limit their ability to save. The provider will continue to press for reforms ahead of the Autumn Budget.
