You can currently use a lifetime ISA to buy a property of up to £450,000. This price was set at the creation of the ISA over 5 years ago. Property prices have increased significantly since then, especially during the pandemic, and the lifetime ISA purchase price needs to as well.
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Maintaining the current cap forces many first time buyers to buy a property of lower value, quality and size than they would have originally aimed to do when signing up for the scheme.
They are now locked in as they risk a 25% penalty if they withdraw from their lifetime ISA for a property that more reflects the market.