Martin Lewis reacts to Treasury Committee report on Lifetime ISAs

On Monday (30 June), the Treasury Select Committee will publish a report evaluating whether the Lifetime ISA (LISA) is an appropriate financial product.

Martin Lewis has long campaigned for reform to LISAs – highlighting that the £450,000 LISA house price limit has remained frozen since it launched in 2017, despite house prices rising significantly since then. This has left some first-time buyers unable to find a suitable property under the limit, and savers buying a home that no longer qualifies are then effectively charged a 6.25% penalty to withdraw funds.

Martin gave evidence to the committee on 26 February 2025 - see excerpts of his appearance here.

Reacting the report, Martin Lewis, founder of MoneySavingExpert.com, said: "Lifetime ISAs have worked well for many, but there is a growing hole that needs urgently addressing. No first-time buyer should be penalised for accessing their LISA savings to buy their first property – as that’s what the state, and the marketing, encourages them to do.”

“Yet that’s what happens when young people, priced out by inflation, try to use their LISA savings for a home above the £450,000 threshold (which hasn’t moved since LISAs launched in 2017) – as is getting more common in the SE of England. It’s understandable that they don’t get the 25% bonus, but they are effectively fined 6.25% of their money (so £625 per £10,000 saved) to withdraw it. This is unfair, unjust and the rules need changing. If a LISA is used to buy a property above the threshold, there’s should be no fine, they should get back at least what they put in.”

“And this flaw doesn’t just hurt those with LISAs. It puts off many young people, especially from lower income backgrounds, who tend to be more risk averse, from opening LISAs in the first place.”

“This is something we’ve banged the drum about for years. So, I’m glad it appears in the Treasury Committee report. It’s a small fix, with very little cost to the state, that would enable and encourage many young people to feel confident about LISAs – and so it’s critical it’s addressed in the government’s imminently expected ISA review."

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