MSE News: Government fails to act on Lifetime ISA fines

masonic

Kim_13 said:

If you are buying as a couple, £450K is £225K each - some of which must be a mortgage. I don't think that equates to being rich and undeserving of help.

I have long thought there should be different regional limits - £450K in London will buy a one bed flat if that, but if you have £450K in the North I would suggest you probably aren't struggling.

The issue with regional limits is that if you help people in already expensive areas to sell their home for more, then this does nothing to address the regional inequalities. 

marineengineer

This is a joke, with all the evidence given? It is clear that the 450K cap is not suitable for London. In my area where my daughter is already settled at school 450k barely gets a 2 bed flat. When I started the lisa 10 years ago, 450k cap was ok. You cannot tell me in 10 years that house prices have not increased substantially. 

Furthermore at least let me withdraw the money I put in without getting less back. It’s an absolute scam.

epm-84

marineengineer said:

This is a joke, with all the evidence given? It is clear that the 450K cap is not suitable for London. In my area where my daughter is already settled at school 450k barely gets a 2 bed flat. When I started the lisa 10 years ago, 450k cap was ok. You cannot tell me in 10 years that house prices have not increased substantially. 

Furthermore at least let me withdraw the money I put in without getting less back. It’s an absolute scam.

The LISA hasn't been going for 10 years yet. Maybe you had a Help2Buy ISA that you transferred into a LISA?

I suppose another issue is you could have two similar properties - one with an asking price of £435k, and another with an asking price of £455k, but the former needing quite a bit of renovation work, which wouldn't be ideal if you have a youngish child or can't invest the time needed into renovation.

Some people (without Lifetime ISAs) might also use the cap to their advantage e.g. offer £451k, as it'll eliminate other interested parties.

fistfulofsteel

I wish they'd remove the mortgage requirement. I'm about to buy (half of) a very cheap property in cash (because I don't earn enough or have enough income security to get a mortgage) and that'll mean my LISA cash is locked away for 20+ years and will prevent me claiming UC. I earn a few hundred dollars (not pounds, another thing mortgage providers don't like) a month on average and it's likely to get worse as the industry I've always worked in is becoming obsolete. I guess at some point I'll end up paying the withdrawal penalty.

epm-84

fistfulofsteel said:

I wish they'd remove the mortgage requirement. I'm about to buy (half of) a very cheap property in cash (because I don't earn enough or have enough income security to get a mortgage) and that'll mean my LISA cash is locked away for 20+ years and will prevent me claiming UC. I earn a few hundred dollars (not pounds, another thing mortgage providers don't like) a month on average and it's likely to get worse as the industry I've always worked in is becoming obsolete. I guess at some point I'll end up paying the withdrawal penalty.

Have you considered an offset mortgage for the smallest amount possible?

I do think the Lifetime ISA should be excluded for Universal Credit applications. Also the savings threshold should be raised - it's been stuck at the same level for a very long time.

Kim_13

epm-84 said:

fistfulofsteel said:

I wish they'd remove the mortgage requirement. I'm about to buy (half of) a very cheap property in cash (because I don't earn enough or have enough income security to get a mortgage) and that'll mean my LISA cash is locked away for 20+ years and will prevent me claiming UC. I earn a few hundred dollars (not pounds, another thing mortgage providers don't like) a month on average and it's likely to get worse as the industry I've always worked in is becoming obsolete. I guess at some point I'll end up paying the withdrawal penalty.

Have you considered an offset mortgage for the smallest amount possible?

I do think the Lifetime ISA should be excluded for Universal Credit applications. Also the savings threshold should be raised - it's been stuck at the same level for a very long time.

I agree, residential homes are excluded from the same calculations as are private pensions (the 2nd use of a LISA) and if an unforseen event happens, you can go from being on the verge of buying to having to spend your deposit to live (as many prospective FTBs will have been forced to do in COVID.) A few months later and they would have been homeowners and entitled to some UC.

fistfulofsteel

epm-84 said:

fistfulofsteel said:

I wish they'd remove the mortgage requirement. I'm about to buy (half of) a very cheap property in cash (because I don't earn enough or have enough income security to get a mortgage) and that'll mean my LISA cash is locked away for 20+ years and will prevent me claiming UC. I earn a few hundred dollars (not pounds, another thing mortgage providers don't like) a month on average and it's likely to get worse as the industry I've always worked in is becoming obsolete. I guess at some point I'll end up paying the withdrawal penalty.

Have you considered an offset mortgage for the smallest amount possible?

I do think the Lifetime ISA should be excluded for Universal Credit applications. Also the savings threshold should be raised - it's been stuck at the same level for a very long time.

Can I get one of those with no GBP income/possibly no income by the time the sale happens?

marineengineer

epm-84 said:

marineengineer said:

This is a joke, with all the evidence given? It is clear that the 450K cap is not suitable for London. In my area where my daughter is already settled at school 450k barely gets a 2 bed flat. When I started the lisa 10 years ago, 450k cap was ok. You cannot tell me in 10 years that house prices have not increased substantially. 

Furthermore at least let me withdraw the money I put in without getting less back. It’s an absolute scam.

The LISA hasn't been going for 10 years yet. Maybe you had a Help2Buy ISA that you transferred into a LISA?

I suppose another issue is you could have two similar properties - one with an asking price of £435k, and another with an asking price of £455k, but the former needing quite a bit of renovation work, which wouldn't be ideal if you have a youngish child or can't invest the time needed into renovation.

Some people (without Lifetime ISAs) might also use the cap to their advantage e.g. offer £451k, as it'll eliminate other interested parties.

Sorry my bad it was started 8.4 years ago. I'd just like to give you some context, for example, there is a house in the area I am living now, in 2019 well after the lifetime isa was introduced a 3 bedroom semi-detached house was sold for 370K. That same property is up for sale now for 600K. It is absolute madness that the cap has not increased along with inflation. It's an absolute disgrace.

marineengineer

Mark_d said:

If you were genuinely a struggling first time buyer then you wouldn't need to buy a property in excess of £450k.  When I was a first time buyer, I could afford a mortgage but couldn't buy a property near my workplace because I didn't have the deposit - and it was difficult to save up for a deposit whilst renting.

What I did was to buy a property 45 minutes away down the train line.  My outgoings were the same as had I been able to buy near my workplace - but in this new location I had smaller mortgage but I also had commuting costs.

 I'd just like to give you some context, for example, there is a house in the area I am living now, in 2019 well after the lifetime isa was introduced a 3 bedroom semi-detached house was sold for 370K. That same property is up for sale now for 600K. It is absolute madness that the cap has not increased along with inflation. It's an absolute disgrace.

masonic

marineengineer said:

Mark_d said:

If you were genuinely a struggling first time buyer then you wouldn't need to buy a property in excess of £450k.  When I was a first time buyer, I could afford a mortgage but couldn't buy a property near my workplace because I didn't have the deposit - and it was difficult to save up for a deposit whilst renting.

What I did was to buy a property 45 minutes away down the train line.  My outgoings were the same as had I been able to buy near my workplace - but in this new location I had smaller mortgage but I also had commuting costs.

 I'd just like to give you some context, for example, there is a house in the area I am living now, in 2019 well after the lifetime isa was introduced a 3 bedroom semi-detached house was sold for 370K. That same property is up for sale now for 600K. It is absolute madness that the cap has not increased along with inflation. It's an absolute disgrace.

What's absolute madness is the property price inflation that has led to this situation. For that home, it would now take about 12 years to save up a deposit in a LISA, in which time its price may have more than doubled again. Many would struggle to save at a rate that would enable them to raise a deposit fast enough to catch up to house price inflation for properties in this price range.