Lifetime ISA cap ‘unrealistic’ for officers and staff in current housing market, says Metfriendly
Metfriendly is calling for the Chancellor of the Exchequer to reform the Lifetime ISA (LISA) allowance during his Spring Budget.
LISAs incentivise those eligible to save for their first property or retirement by offering a 25 per cent bonus of up to £1,000 a tax year.
However, the UK police family finance specialist says the proposition, as it stands, is not supporting officers and staff, their families and other public sector workers as best it could be.
The current rules mean savings can be put towards a property worth up to £450,000, with those who exceed the allowance being penalised with a 25 per cent fine.
However, house prices are continuing to rise, particularly in cities. In London, the average property costs £516,000, and first-time buyers typically pay £465,0001.
“The £450,000 cap is, therefore, an unrealistic limit for many first-time buyers – especially police officers, police staff, their families and other public sector workers who need to live close to their place of work,” said Metfriendly.
It wants the current cap to be increased from £450,000 and for the Chancellor to consider switching the current property cap to a personal limit of £450,000. This would mean those buying together as a couple can combine their limits to make an average-price first-time property purchase achievable without incurring a penalty charge.
Annette Petchey, chief executive officer of Metfriendly, said, “The LISA is a brilliant proposition, but as it stands, it excludes police officers, police staff and their families, and other public sector workers, from benefitting when it comes to their first home purchase.
“A huge proportion of the UK’s police workforce have to live up to two hours away from their place of work simply because they cannot afford to get onto the property ladder closer to their workplace.
“Frontline officers cannot work from home, and even when there’s travel disruption, they still need to find a way into work. But today’s property market is pricing them out.”
She added: “This is an unintended consequence but a very real one. Introducing the reforms we have set out will make a real difference to many police officers, police staff and their families, demonstrating the Government’s recognition of their work and reinforcing the commitments made in the Police Covenant to support police families.”