Is there any way round the Lifetime ISA limit?

[flyright]

I've been investing in a LISA for my daughter for 6 or 7 years. It seemed like a no- brainer, you can put in up to 4k a year and the gvmt adds 25%. It's also invested so the 5k a year also grows that way.

To withdraw without penalty you need to use it to buy your first property or leave it for your pension.

She's hoping to use the money as part of a deposit on a house purchase with her boyfriend but there's a limit of 450k on what you can buy and they would ideally buy something costing more. Likely area is Oxford so prices are high.

I'm frustrated about it because I was so sure this was the best way to help her but I'm not so certain now. The 450k limit was set years ago and never gets updated. Ideally the new gvmt will do so but I appreciate they have rather more pressing things to attend to.

Is there any way to use this money without penalty if the house is say 550k?

No. Do lobby your MP about it though.

Martin Lewis has been trying to get this limit revised but hasn’t had any luck yet, but it may be worth checking the MSE site. Writing to your mp seems like a sensible suggestion.

Yes it does. Once my MP, Rupa Huq, is back in business I shall do that. And Martin Lewis has influence so hopefully it will get raised at some point.

Thanks for the comments.

My sympathies. We live in Oxford and the semis around here are typically 500-550 k as of the last couple of years. We bought a mid-terrace ex-council property as our first house then upsized locally after our children were born. I just looked at prices and estimates in our original street and yes, 460-480 k for terraces looks about the starting point. Restricting yourself to <450k for a first property can still be done in Oxford, but might involve a flat or a less great location, and then you'll want to trade up sooner than you otherwise might.

We've held off on starting LISAs with our children for the time being (they're a little younger than your daughter), at least until we've some inkling of where their lives might lead them!

I agree both the property limits and especially the penalties for withdrawal outwith the guidelines are unrealistic, especially if investments have done well.

My younger colleagues at work have come up against this. There are quite a few that had been saving in the LiSAs for years and debating taking the money out and taking the (chunky) hit or capping the property they can buy in London.