I lost thousands in savings and my partner's money is in limbo

'I lost thousands in savings and my partner's money is in limbo' 8 hours ago Share Save Add as preferred on Google Meghan Owen , London work and money correspondent and Jonathan Fagg , England Data Unit BBC Fraser Glen and his partner Sophie Bauer say the scheme has not worked for them The Lifetime ISA (LISA) was set up in 2017 to help people save for retirement or purchase a first home costing up to £450,000. First-time buyers can put aside £4,000 a year and get an annual government bonus of 25%. But if savers are unable to find a property below the cap and need to withdraw the money, they face a financial penalty which costs them 6.25% of their savings. With the average first-time buyer now spending £463,000 in London, the scheme's property price cap is seen by many as being out of step with the capital's housing market. Based on figures from September 2025, BBC analysis found that the median LISA user could afford: The average flat in only 16 of London's 33 boroughs The average terraced home in only three boroughs The average semi-detached home in one borough No borough had an average detached home within reach In 13 boroughs, the median price for all types of properties was above £450,000. Those making unauthorised withdrawals outnumber the people using a LISA for a house purchase: in 2024-25, across the UK about 87,250 people made authorised withdrawals for a house purchase, while 129,200 made unauthorised withdrawals. We speak to young Londoners about their experiences with the scheme. 'It hindered not helped us' Fraser Glen, 35, and his partner Sophie Bauer, 30, both started saving into Lifetime ISAs a few years ago with the intention of using the funds to get on to the property ladder. But after searching for flats in 2024 - looking at over 30 properties in central and east London - they realised how difficult it was to find one under the price cap that would meet their needs. "People may think we're talking about luxury, big properties with big bedrooms, multiple properties - that's not what we were talking about at all," Fraser says. "We're talking about one, two-bedroom flats; the costs significantly more than £450,000 if you want to live within touching distance of central London where lots of us work." In order to buy their "modest two-bedroom flat" in Tower Hamlets for £521,000, Sophie withdrew her money from the LISA and lost £3,500. Fraser decided to keep his money in the LISA to avoid the penalty - leaving £50,000 of his savings "in limbo", as he can't access the money until he is 60 years old without losing a chunk of it. "This is a savings tool which hindered rather than helped us, which leaves a bad taste," he says. "What you're either doing is encouraging young people to move out of London where a lot of jobs and opportunities are, and then paying huge amounts to get in on the train, or you have to cash out like we did and take the loss," Sophie says. Calvin Kern wants to see the penalties for early withdrawal removed Calvin