£450k lifetime isa price limit

Brocade

Hi, my daughter and her partner are hoping to buy a family house within commuting distance of their work places in London. They have been saving in lifetime ISAs, and we may be in a position soon to be able to help increase their deposit. The problem is that there are very few properties within their search area that are below the £450k limit, even a very modest terraced house is £430k plus, and if they were bidding on a property they would have to drop out at £450k, even if their budget could stretch just beyond that figure. My question is, are there any plans to increase the maximum property value for first time buyers with a lifetime isa? House prices have risen so much that this is unfortunately no longer a realistic figure. Many thanks

masonic

No plans that I'm aware of. I get the impression there is a greater likelihood in the short term of a property crash than the government uprating this limit.

Albermarle

Maybe they should look a bit farther out of London.
Even still within the M25 /near a commuter railway station , you can still buy decent 2 bedroom flats/apartments for £300K and a two bedroom smallish house for less than £450K.
Although buying a family house for that much would be pretty impossible , unless you went a long way out.

Brocade

That's the problem, they need 3 bedrooms and some outside space, they are already looking outside the M25. They also have to consider proximity to good schools for the near future, as well as good commuter links. It would appear very difficult within the £450k limit.

masonic

It sounds like they have their hearts set on a property of a more premium nature, whereas the scheme was intended to help those unable to afford to raise a deposit on any property. There's nothing wrong with such aspirations of course, and if they can afford better, with your help, it would probably be money well spent.

MK62

Their problem might well be that they have a considerable part of their deposit tied up in LISAs, which they can't use to put towards any property over 450k, and can't cash in without losing a big part of their deposit......catch 22. I doubt any threshold rise is on the cards......such things are usually leaked to the press in advance........so the only thing I could suggest is writing to the local MP and see if he/she can raise it with the chancellor, though I'd be surprised if that got anywhere (though you never know)

Albermarle

Brocade said:

That's the problem, they need 3 bedrooms and some outside space, they are already looking outside the M25. They also have to consider proximity to good schools for the near future, as well as good commuter links. It would appear very difficult within the £450k limit.

The LISA was designed to help first time buyers , who normally go for something a bit more basic .
It sounds like they are wanting to bypass this, and go straight to a more typical second time purchase.
Family home - garden - good schools catchment area ( i.e nice area ) & easily commutable to London so inevitably the price is going to be high as this is what loads of other people are looking for . 

masonic

MK62 said:

Their problem might well be that they have a considerable part of their deposit tied up in LISAs, which they can't use to put towards any property over 450k, and can't cash in without losing a big part of their deposit......catch 22.

Yes, if they can only put down a sufficient deposit on a property >£450k using bonus money they can't use due to eligibility criteria, then that could be a problem. Otherwise, it works out at just over a 6% net loss. Obviously not great to have to pay that price vs saving outside of the LISA from the outset, but the question is would they settle for a more modest home, which of course they could upsize in the future. There would be costs associated with that, and a lifestyle impact, so would be very much dependent on their circumstances and preferences. I would tend to think if their ideal home is within reach, it would be worth securing it over prioritising money with strings attached.

Brocade

Yes, it's a real indication of the rise in property prices that a modest terraced house with a small garden is now seen as a premium property, out of the reach of first time buyers. Perhaps the key is not to work in London, but my daughter and her partner both work in a creative industry that is very much based in the city, but unfortunately without the high pay packets to go with it. They thought they were doing the sensible thing in saving in LISAs, but it seems that may not have been the case.

tebbins

The scheme was never intended to help people who don't need it buy expensive houses in London - they could cash in on a starter home then move on up after a couple of years to somewhere they actually want.
Even in nice, middle-class parts of the North West £450k can get you a 5+ bed detached on a site larger than 0.5ha and the life up here is much calmer than the South. I don't understand why people want to stay down there. We do have Waitrose and theatres and decent paying jobs and attractive city centres and beaches and a cruise port and whatever else the South offers.