MSE News: Martin Lewis: Is a Lifetime ISA win coming in the Budget?

WillPS

MeteredOut said:

zagfles said:

eskbanker said:

cfw1994 said:

The original value of 450k would now be something like 565K if it took into account inflation.  Why should that not be the value for use of a LISA?

There's no automatic right to have values adjusted by inflation - it's not some sort of default position!  There are countless examples of figures that haven't been increased, ranging from the pensioners' Christmas bonus that's been £10 since 1972, through frozen thresholds for income tax and IHT, and ISA annual contribution limits, to the property value caps in LISA's precursor, Help To Buy ISA.

No doubt plenty of respondents to the above consultation process will have argued for indexation, but note that there are also questions like "Should the Lifetime ISA be abolished?" and "Given its policy purposes, is the Lifetime ISA value for money for the Government?" so it's not a one-way street where it's all about making the scheme more consumer-friendly....

So the govt sets up a scheme where you can save over several years to buy your dream house and get a bonus towards its purchase. So young people save in such a scheme. No brainer, right? 

But over those several years while they're diligently saving, the price of that dream house has risen to above the limit you're allowed to use the LISA for. So not only do they now have to pay far more for the house, not only do they lose the bonus they thought they'd get, but they also have to pay a penalty to get access to their own saved money! A triple whammy. 

It's an unbelievably ridiculous and unjust situation. Virtually all govt interference in the housing market that's supposed to help people simply pushes prices up, so doesn't actually help anyone wanting to buy. From LISA/HTB ISA's affordable housing schemes eg where builders need to set aside a certain proportion as "affordable", which means the rest are less affordable, shared equity schemes, social housing schemes etc. All just cause prices to rise. 

The scheme was put in place to help first time buyers to buy a house, not a dream house. Generations of people have their first house as "good enough".

You're right that scheme such as this just help the upwards pressure on prices, so perhaps it should just be abolished?

Exactly the same applies to "first house" though - it isn't only aspirational properties which go up in value.

MeteredOut

WillPS said:

MeteredOut said:

zagfles said:

eskbanker said:

cfw1994 said:

The original value of 450k would now be something like 565K if it took into account inflation.  Why should that not be the value for use of a LISA?

There's no automatic right to have values adjusted by inflation - it's not some sort of default position!  There are countless examples of figures that haven't been increased, ranging from the pensioners' Christmas bonus that's been £10 since 1972, through frozen thresholds for income tax and IHT, and ISA annual contribution limits, to the property value caps in LISA's precursor, Help To Buy ISA.

No doubt plenty of respondents to the above consultation process will have argued for indexation, but note that there are also questions like "Should the Lifetime ISA be abolished?" and "Given its policy purposes, is the Lifetime ISA value for money for the Government?" so it's not a one-way street where it's all about making the scheme more consumer-friendly....

So the govt sets up a scheme where you can save over several years to buy your dream house and get a bonus towards its purchase. So young people save in such a scheme. No brainer, right? 

But over those several years while they're diligently saving, the price of that dream house has risen to above the limit you're allowed to use the LISA for. So not only do they now have to pay far more for the house, not only do they lose the bonus they thought they'd get, but they also have to pay a penalty to get access to their own saved money! A triple whammy. 

It's an unbelievably ridiculous and unjust situation. Virtually all govt interference in the housing market that's supposed to help people simply pushes prices up, so doesn't actually help anyone wanting to buy. From LISA/HTB ISA's affordable housing schemes eg where builders need to set aside a certain proportion as "affordable", which means the rest are less affordable, shared equity schemes, social housing schemes etc. All just cause prices to rise. 

The scheme was put in place to help first time buyers to buy a house, not a dream house. Generations of people have their first house as "good enough".

You're right that scheme such as this just help the upwards pressure on prices, so perhaps it should just be abolished?

Exactly the same applies to "first house" though - it isn't only aspirational properties which go up in value.

I'd suggest there is not that many areas where people can't find a non-aspirational/non-dream property for under £450K, even in the South East.

WillPS

MeteredOut said:

WillPS said:

MeteredOut said:

zagfles said:

eskbanker said:

cfw1994 said:

The original value of 450k would now be something like 565K if it took into account inflation.  Why should that not be the value for use of a LISA?

There's no automatic right to have values adjusted by inflation - it's not some sort of default position!  There are countless examples of figures that haven't been increased, ranging from the pensioners' Christmas bonus that's been £10 since 1972, through frozen thresholds for income tax and IHT, and ISA annual contribution limits, to the property value caps in LISA's precursor, Help To Buy ISA.

No doubt plenty of respondents to the above consultation process will have argued for indexation, but note that there are also questions like "Should the Lifetime ISA be abolished?" and "Given its policy purposes, is the Lifetime ISA value for money for the Government?" so it's not a one-way street where it's all about making the scheme more consumer-friendly....

So the govt sets up a scheme where you can save over several years to buy your dream house and get a bonus towards its purchase. So young people save in such a scheme. No brainer, right? 

But over those several years while they're diligently saving, the price of that dream house has risen to above the limit you're allowed to use the LISA for. So not only do they now have to pay far more for the house, not only do they lose the bonus they thought they'd get, but they also have to pay a penalty to get access to their own saved money! A triple whammy. 

It's an unbelievably ridiculous and unjust situation. Virtually all govt interference in the housing market that's supposed to help people simply pushes prices up, so doesn't actually help anyone wanting to buy. From LISA/HTB ISA's affordable housing schemes eg where builders need to set aside a certain proportion as "affordable", which means the rest are less affordable, shared equity schemes, social housing schemes etc. All just cause prices to rise. 

The scheme was put in place to help first time buyers to buy a house, not a dream house. Generations of people have their first house as "good enough".

You're right that scheme such as this just help the upwards pressure on prices, so perhaps it should just be abolished?

Exactly the same applies to "first house" though - it isn't only aspirational properties which go up in value.

I'd suggest there is not that many areas where people can't find a non-aspirational/non-dream property for under £450K, even in the South East.

I agree, it's a small geographic area right now - but it is an area nonetheless, and given house prices go up with time that area will widen. When do you suggest the £450k limit should be reviewed?

zagfles

MeteredOut said:

zagfles said:

eskbanker said:

cfw1994 said:

The original value of 450k would now be something like 565K if it took into account inflation.  Why should that not be the value for use of a LISA?

There's no automatic right to have values adjusted by inflation - it's not some sort of default position!  There are countless examples of figures that haven't been increased, ranging from the pensioners' Christmas bonus that's been £10 since 1972, through frozen thresholds for income tax and IHT, and ISA annual contribution limits, to the property value caps in LISA's precursor, Help To Buy ISA.

No doubt plenty of respondents to the above consultation process will have argued for indexation, but note that there are also questions like "Should the Lifetime ISA be abolished?" and "Given its policy purposes, is the Lifetime ISA value for money for the Government?" so it's not a one-way street where it's all about making the scheme more consumer-friendly....

So the govt sets up a scheme where you can save over several years to buy your dream house and get a bonus towards its purchase. So young people save in such a scheme. No brainer, right? 

But over those several years while they're diligently saving, the price of that dream house has risen to above the limit you're allowed to use the LISA for. So not only do they now have to pay far more for the house, not only do they lose the bonus they thought they'd get, but they also have to pay a penalty to get access to their own saved money! A triple whammy. 

It's an unbelievably ridiculous and unjust situation. Virtually all govt interference in the housing market that's supposed to help people simply pushes prices up, so doesn't actually help anyone wanting to buy. From LISA/HTB ISA's affordable housing schemes eg where builders need to set aside a certain proportion as "affordable", which means the rest are less affordable, shared equity schemes, social housing schemes etc. All just cause prices to rise. 

The scheme was put in place to help first time buyers to buy a house, not so that they could afford dream house. Generations of people have accepted their first house has to be "good enough" and I can guarantee that the vast majority people trying to find a house could find one that can work for them for under £450K, even in the South East. It might not be exactly where they want it, but that's the compromise everyone else has to make.

You're right that scheme such as this just help the upwards pressure on prices, so perhaps it should just be abolished?

Yeah, it should be abolished, but while it exists people have to use them otherwise they suffer the effects (higher prices) without the benefits. 

All comes from too many innumerate people thinking rising house prices are a good thing, and so successive govts doing stuff like this to fuel house price inflation and which costs the treasury, instead of doing stuff that would dampen inflation and make money for the treasury, like abolishing PPR CGT relief allowing rollforwards. 

cfw1994

MeteredOut said:

zagfles said:

eskbanker said:

cfw1994 said:

The original value of 450k would now be something like 565K if it took into account inflation.  Why should that not be the value for use of a LISA?

There's no automatic right to have values adjusted by inflation - it's not some sort of default position!  There are countless examples of figures that haven't been increased, ranging from the pensioners' Christmas bonus that's been £10 since 1972, through frozen thresholds for income tax and IHT, and ISA annual contribution limits, to the property value caps in LISA's precursor, Help To Buy ISA.

No doubt plenty of respondents to the above consultation process will have argued for indexation, but note that there are also questions like "Should the Lifetime ISA be abolished?" and "Given its policy purposes, is the Lifetime ISA value for money for the Government?" so it's not a one-way street where it's all about making the scheme more consumer-friendly....

So the govt sets up a scheme where you can save over several years to buy your dream house and get a bonus towards its purchase. So young people save in such a scheme. No brainer, right? 

But over those several years while they're diligently saving, the price of that dream house has risen to above the limit you're allowed to use the LISA for. So not only do they now have to pay far more for the house, not only do they lose the bonus they thought they'd get, but they also have to pay a penalty to get access to their own saved money! A triple whammy. 

It's an unbelievably ridiculous and unjust situation. Virtually all govt interference in the housing market that's supposed to help people simply pushes prices up, so doesn't actually help anyone wanting to buy. From LISA/HTB ISA's affordable housing schemes eg where builders need to set aside a certain proportion as "affordable", which means the rest are less affordable, shared equity schemes, social housing schemes etc. All just cause prices to rise. 

The scheme was put in place to help first time buyers to buy a house, not so that they could afford dream house. Generations of people have accepted their first house has to be "good enough" and I can guarantee that the vast majority people trying to find a house could find one that can work for them for under £450K, even in the South East. It might not be exactly where they want it, but that's the compromise everyone else has to make.

You're right that scheme such as this just help the upwards pressure on prices, so perhaps it should just be abolished?

This comment shows how out of touch with London prices people can be.
I challenge you to find a choice of 2-bed flats in the Clapham-Oval area under £450K

It is not about a 'dream home', I'm afraid.   It is City prices.

masonic

cfw1994 said:

MeteredOut said:

zagfles said:

eskbanker said:

cfw1994 said:

The original value of 450k would now be something like 565K if it took into account inflation.  Why should that not be the value for use of a LISA?

There's no automatic right to have values adjusted by inflation - it's not some sort of default position!  There are countless examples of figures that haven't been increased, ranging from the pensioners' Christmas bonus that's been £10 since 1972, through frozen thresholds for income tax and IHT, and ISA annual contribution limits, to the property value caps in LISA's precursor, Help To Buy ISA.

No doubt plenty of respondents to the above consultation process will have argued for indexation, but note that there are also questions like "Should the Lifetime ISA be abolished?" and "Given its policy purposes, is the Lifetime ISA value for money for the Government?" so it's not a one-way street where it's all about making the scheme more consumer-friendly....

So the govt sets up a scheme where you can save over several years to buy your dream house and get a bonus towards its purchase. So young people save in such a scheme. No brainer, right? 

But over those several years while they're diligently saving, the price of that dream house has risen to above the limit you're allowed to use the LISA for. So not only do they now have to pay far more for the house, not only do they lose the bonus they thought they'd get, but they also have to pay a penalty to get access to their own saved money! A triple whammy. 

It's an unbelievably ridiculous and unjust situation. Virtually all govt interference in the housing market that's supposed to help people simply pushes prices up, so doesn't actually help anyone wanting to buy. From LISA/HTB ISA's affordable housing schemes eg where builders need to set aside a certain proportion as "affordable", which means the rest are less affordable, shared equity schemes, social housing schemes etc. All just cause prices to rise. 

The scheme was put in place to help first time buyers to buy a house, not so that they could afford dream house. Generations of people have accepted their first house has to be "good enough" and I can guarantee that the vast majority people trying to find a house could find one that can work for them for under £450K, even in the South East. It might not be exactly where they want it, but that's the compromise everyone else has to make.

You're right that scheme such as this just help the upwards pressure on prices, so perhaps it should just be abolished?

This comment shows how out of touch with London prices people can be.
I challenge you to find a choice of 2-bed flats in the Clapham-Oval area under £450K

It is not about a 'dream home', I'm afraid.   It is City prices.

I get loads of results within a 3 mile radius. People shouldn't be subsidised using taxpayer's money to buy a home in a specific postcode area of their choice.

eskbanker

zagfles said:

eskbanker said:

cfw1994 said:

The original value of 450k would now be something like 565K if it took into account inflation.  Why should that not be the value for use of a LISA?

There's no automatic right to have values adjusted by inflation - it's not some sort of default position!  There are countless examples of figures that haven't been increased, ranging from the pensioners' Christmas bonus that's been £10 since 1972, through frozen thresholds for income tax and IHT, and ISA annual contribution limits, to the property value caps in LISA's precursor, Help To Buy ISA.

No doubt plenty of respondents to the above consultation process will have argued for indexation, but note that there are also questions like "Should the Lifetime ISA be abolished?" and "Given its policy purposes, is the Lifetime ISA value for money for the Government?" so it's not a one-way street where it's all about making the scheme more consumer-friendly....

So the govt sets up a scheme where you can save over several years to buy your dream house and get a bonus towards its purchase. So young people save in such a scheme. No brainer, right? 

But over those several years while they're diligently saving, the price of that dream house has risen to above the limit you're allowed to use the LISA for. So not only do they now have to pay far more for the house, not only do they lose the bonus they thought they'd get, but they also have to pay a penalty to get access to their own saved money! A triple whammy. 

It's an unbelievably ridiculous and unjust situation. Virtually all govt interference in the housing market that's supposed to help people simply pushes prices up, so doesn't actually help anyone wanting to buy. From LISA/HTB ISA's affordable housing schemes eg where builders need to set aside a certain proportion as "affordable", which means the rest are less affordable, shared equity schemes, social housing schemes etc. All just cause prices to rise. 

Yes, the product structure undoubtedly disadvantages those who find themselves unable to find a suitable property, but my point was that in itself that doesn't justify indexation, i.e. it's not as if any promises of such increases were made or implied, so I was just challenging the apparent sense of entitlement, in the context of many other areas where inflationary increases haven't been applied.

I imagine that others will also have been making representations along the lines you argue, but again the purpose of my post wasn't to defend the product but to emphasise that the questions in the consultation mean that it could go either way, i.e. it's not a given that it'll result in improvements for those using, or thinking of using, the product.

zagfles

eskbanker said:

zagfles said:

eskbanker said:

cfw1994 said:

The original value of 450k would now be something like 565K if it took into account inflation.  Why should that not be the value for use of a LISA?

There's no automatic right to have values adjusted by inflation - it's not some sort of default position!  There are countless examples of figures that haven't been increased, ranging from the pensioners' Christmas bonus that's been £10 since 1972, through frozen thresholds for income tax and IHT, and ISA annual contribution limits, to the property value caps in LISA's precursor, Help To Buy ISA.

No doubt plenty of respondents to the above consultation process will have argued for indexation, but note that there are also questions like "Should the Lifetime ISA be abolished?" and "Given its policy purposes, is the Lifetime ISA value for money for the Government?" so it's not a one-way street where it's all about making the scheme more consumer-friendly....

So the govt sets up a scheme where you can save over several years to buy your dream house and get a bonus towards its purchase. So young people save in such a scheme. No brainer, right? 

But over those several years while they're diligently saving, the price of that dream house has risen to above the limit you're allowed to use the LISA for. So not only do they now have to pay far more for the house, not only do they lose the bonus they thought they'd get, but they also have to pay a penalty to get access to their own saved money! A triple whammy. 

It's an unbelievably ridiculous and unjust situation. Virtually all govt interference in the housing market that's supposed to help people simply pushes prices up, so doesn't actually help anyone wanting to buy. From LISA/HTB ISA's affordable housing schemes eg where builders need to set aside a certain proportion as "affordable", which means the rest are less affordable, shared equity schemes, social housing schemes etc. All just cause prices to rise. 

Yes, the product structure undoubtedly disadvantages those who find themselves unable to find a suitable property, but my point was that in itself that doesn't justify indexation, i.e. it's not as if any promises of such increases were made or implied, so I was just challenging the apparent sense of entitlement, in the context of many other areas where inflationary increases haven't been applied.

I imagine that others will also have been making representations along the lines you argue, but again the purpose of my post wasn't to defend the product but to emphasise that the questions in the consultation mean that it could go either way, i.e. it's not a given that it'll result in improvements for those using, or thinking of using, the product.

So what other non indexation issue results in the same sort of triple whammy? Obviously there was no legal or contractual entitlement, but this issue is so obviously far more unfair than non indexation of tax thresholds etc. 

zagfles

masonic said:

cfw1994 said:

MeteredOut said:

zagfles said:

eskbanker said:

cfw1994 said:

The original value of 450k would now be something like 565K if it took into account inflation.  Why should that not be the value for use of a LISA?

There's no automatic right to have values adjusted by inflation - it's not some sort of default position!  There are countless examples of figures that haven't been increased, ranging from the pensioners' Christmas bonus that's been £10 since 1972, through frozen thresholds for income tax and IHT, and ISA annual contribution limits, to the property value caps in LISA's precursor, Help To Buy ISA.

No doubt plenty of respondents to the above consultation process will have argued for indexation, but note that there are also questions like "Should the Lifetime ISA be abolished?" and "Given its policy purposes, is the Lifetime ISA value for money for the Government?" so it's not a one-way street where it's all about making the scheme more consumer-friendly....

So the govt sets up a scheme where you can save over several years to buy your dream house and get a bonus towards its purchase. So young people save in such a scheme. No brainer, right? 

But over those several years while they're diligently saving, the price of that dream house has risen to above the limit you're allowed to use the LISA for. So not only do they now have to pay far more for the house, not only do they lose the bonus they thought they'd get, but they also have to pay a penalty to get access to their own saved money! A triple whammy. 

It's an unbelievably ridiculous and unjust situation. Virtually all govt interference in the housing market that's supposed to help people simply pushes prices up, so doesn't actually help anyone wanting to buy. From LISA/HTB ISA's affordable housing schemes eg where builders need to set aside a certain proportion as "affordable", which means the rest are less affordable, shared equity schemes, social housing schemes etc. All just cause prices to rise. 

The scheme was put in place to help first time buyers to buy a house, not so that they could afford dream house. Generations of people have accepted their first house has to be "good enough" and I can guarantee that the vast majority people trying to find a house could find one that can work for them for under £450K, even in the South East. It might not be exactly where they want it, but that's the compromise everyone else has to make.

You're right that scheme such as this just help the upwards pressure on prices, so perhaps it should just be abolished?

This comment shows how out of touch with London prices people can be.
I challenge you to find a choice of 2-bed flats in the Clapham-Oval area under £450K

It is not about a 'dream home', I'm afraid.   It is City prices.

I get loads of results within a 3 mile radius. People shouldn't be subsidised using taxpayer's money to buy a home in a specific postcode area of their choice.

Yet you'll likely find people being subsidised with taxpayer's money to live in social housing in such areas. And that subsidy is massively more than the trivial amount of LISA subsidy. 

masonic

zagfles said:

masonic said:

cfw1994 said:

MeteredOut said:

zagfles said:

eskbanker said:

cfw1994 said:

The original value of 450k would now be something like 565K if it took into account inflation.  Why should that not be the value for use of a LISA?

There's no automatic right to have values adjusted by inflation - it's not some sort of default position!  There are countless examples of figures that haven't been increased, ranging from the pensioners' Christmas bonus that's been £10 since 1972, through frozen thresholds for income tax and IHT, and ISA annual contribution limits, to the property value caps in LISA's precursor, Help To Buy ISA.

No doubt plenty of respondents to the above consultation process will have argued for indexation, but note that there are also questions like "Should the Lifetime ISA be abolished?" and "Given its policy purposes, is the Lifetime ISA value for money for the Government?" so it's not a one-way street where it's all about making the scheme more consumer-friendly....

So the govt sets up a scheme where you can save over several years to buy your dream house and get a bonus towards its purchase. So young people save in such a scheme. No brainer, right? 

But over those several years while they're diligently saving, the price of that dream house has risen to above the limit you're allowed to use the LISA for. So not only do they now have to pay far more for the house, not only do they lose the bonus they thought they'd get, but they also have to pay a penalty to get access to their own saved money! A triple whammy. 

It's an unbelievably ridiculous and unjust situation. Virtually all govt interference in the housing market that's supposed to help people simply pushes prices up, so doesn't actually help anyone wanting to buy. From LISA/HTB ISA's affordable housing schemes eg where builders need to set aside a certain proportion as "affordable", which means the rest are less affordable, shared equity schemes, social housing schemes etc. All just cause prices to rise. 

The scheme was put in place to help first time buyers to buy a house, not so that they could afford dream house. Generations of people have accepted their first house has to be "good enough" and I can guarantee that the vast majority people trying to find a house could find one that can work for them for under £450K, even in the South East. It might not be exactly where they want it, but that's the compromise everyone else has to make.

You're right that scheme such as this just help the upwards pressure on prices, so perhaps it should just be abolished?

This comment shows how out of touch with London prices people can be.
I challenge you to find a choice of 2-bed flats in the Clapham-Oval area under £450K

It is not about a 'dream home', I'm afraid.   It is City prices.

I get loads of results within a 3 mile radius. People shouldn't be subsidised using taxpayer's money to buy a home in a specific postcode area of their choice.

Yet you'll likely find people being subsidised with taxpayer's money to live in social housing in such areas. And that subsidy is massively more than the trivial amount of LISA subsidy. 

If people are being housed in properties with high rents when equivalent housing is readily available at lower cost within a few miles, then that probably shouldn't be happening either. Especially if the saving to the taxpayer is >>£1k per year.