LISAs encourage people to save for their first home, worth less than £450k, by offering a 25% government bonus. But the average London house price is £507k – well above the cap. Therefore, many looking to buy a home are forced to forego their bonus and pay an additional 6.25% penalty charge.
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The £450k LISA house price cap hasn’t changed since April 2017, despite house prices soaring.
Meanwhile, other government-backed first-time buyer schemes have been introduced with far higher price caps (the Help to Buy price cap in London is £600k) – causing a severe dislocation.
This makes the already near-impossible task of buying a home in London even harder.