Really?
Everyone I know who invests has one as well as their pension. In fact, I don’t know any first time buyers using it - only larger investors.
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I was very conflicted when deciding to open a LISA. There’s a lot of potential gotchas.
- You buy a place before your LISA has been open for 1 year. 25% penalty
- You buy a place for more than £450k (mainly a London concern). 25% penalty
- Your circumstances change and you don’t buy at all. 25% penalty
Luckily for me it’s looking like I’ll be buying outside of London post-COVID so will definitely be <£450k and I’ve banked £3k in govt bonuses in my LISA so far.
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I and everyone I personally know who has a LISA has it for the intention of property, but everyone I know is also an employee so pensions beat LISAs hands-down for retirement. Even for the self-employed SIPPs are generally better for that purpose.
- This is why MSE has always recommended it’s best to open a LISA even if with just £1 just to get the clock ticking. That way you don’t have to wait around as long if you decide to start funding it later
- I wasn’t aware you could use it on properties worth more than £450k, but as you said it’s not much of an issue in most cases
- the penalty actually works at around 6% penalty, not 25%. But right now the government has effectively waived this until the end of this current tax year.
Any chance of a Freetrade LISA happening before the end of this financial year… pretty please! 
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The government did not waive it, they temporarily reduced the penalty ( for withdrawing money that is not used to purchase a home or if you have a terminal or during retirement ) from 25% to 20%
The only thing is the cap for house outside London is less than 250K
Where’s the 250k cap outside of London stated? That should only apply for the Help to Buy, not LISA
I just checked your right the limit is under £450K for both inside and outside London for the LISA ( only applies to the help to buy scheme ) ! My bad 
Thanks for correcting me though 
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Which is effectively the equivalent of waving the 6.25% penalty that applies when it goes back up to 25%…
How does lowering the penalty work in practice?
If you put the maximum £4,000 into a LISA in a given tax year, you’d receive a 25% (£1,000) bonus, so the balance would be £5,000.
Prior to the Government’s change, if you withdrew your funds early, you would be charged 25% of the balance, which recoups the bonus plus an additional charge (equivalent to 6.25% of the money you put in). So you’d get back £3,750.
Now, with the charge at 20%, you’d get back the full £4,000 – this is the money you originally put in.
Does the penalty also apply to investment gains? Or just to the original amount?
Both gains and original amount
Today I realised that my Freetrade ISA is now just a holding pen for funds that are waiting to go into my AJBell 
LISA at the start of the tax year when the LISA allowance resets… and that makes me sad.
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Today, I have had to recommend yet another friend to open their account with HL because of the LISA… 
For a non 
customer, the lack of LISA means can be up to £1,000/year more expensive then HL.
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Do not you find that LISAs not even being on the roadmap makes look completely out of touch with their target customers and the value proposition a bit 
considering:
- LISAs create so much value for young investors over their lifetime and that without one every year that passes, they can lose up to £1,000/year
- 123 votes now for this product offering “Idea”
- the last FreeTrade communication in this chat room was…in May 2019
How can one prone the saving of £100-200/year in account charges as a reason to open a account when one does not even offer a £1,000/year guaranteed profit for those willing to save £4,000/year in a LISA ? 
We save you £100-200/year but you miss out on £1,000/year 
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You don’t miss out on £1000 a year when you can just use any other LISA provider…
You just lose the difference in price. Ie HL vs what Freetrade would charge.
You’re also forgetting that a LISA locks up your money until you retire or buy a house. For those who are home owners or have a partner who has owned a home this means a LISA is effectively a pension. I agree it’s a great product but to say it’s more important than a normal ISA… I have to disagree.
“You don’t miss out on £1000 a year when you can just use any other LISA provider…”:
If in “Ideas” covered in the community forum of we replied with the fact it’s perfectly OK for everyone to take their business elsewhere, away from then why would such topics, forum or company even exist? One could even say, let’s close down and take our business elsewhere, we would not lose out on anything if we did not even have to compare with. The point of this Ideas forum is to ask for features that will make people move/open accounts with
The basics of choice/decision theory teaches all its students costs-benefits analysis. Those who consider opening/moving their brokerage account nearly always think: “Let’s assume I do all my business with this broker. What do I get net of everything I pay for/receive if I do all stock dealing with this broker?”. Apart from a very few people who have several brokerage accounts, most people think like this and they do not think: I’ll have my ISA and SIPP @ , my GIA @ II and my LISA @ HL. So, if they want a LISA, they will not move to / open their ISA, GIA and/or SIPP @ . Indeed, they would not miss out on their £1,000/year of LISA top-up without moving from HL to but it’s irrelevant as we want them to move just as we want to be able to move all our brokerage account types to one provider.
So, after a cost/benefits analysis of having all their brokerage accounts/wrappers (GIA, ISA, LISA, SIPP) in 1 place, considering opportunity costs, people should be better off moving to . Thus, in this cost/benefits analysis, not having a LISA @ for those who want one and are considering moving/opening an account, the up-to £1,000/year is indeed a cost in their simulation, even if “just” an opportunity cost, and having several brokerage accounts is most of the time not a use case in the simulation.
“but to say it’s more important than a normal ISA… I have to disagree.”
No one is saying “LISA is more important than a normal ISA” but yourself so I guess you are disagreeing with yourself. Indeed, one can put every year:
- £15k in a normal ISA
- £4K + £1K top-up in LISA
…and if one only has £4K/year to put in and is happy with locking their money in for years to then buy a house or just wants the £1K top up without touching the money until they’re 60 or even longer (leave as inheritance to their heirs) then it makes total sense. Moreover, they might also have other tax-free investments SEIS/EIS/VCT with much shorter lockup periods and are happy to lock this money up for a longer time. It is neither more nor less important, it is another type of wrapper, with a different time horizon and reward profile in exchange for lockup. Indeed, just as “CashCow”, most LISA holders also have a regular ISA a GIA and sometimes a SIPP.
I have just explained to two people what a LISA was, including the lockup constraint, and they rushed to HL to open their LISA account and transfer to / open a SIPP and regular ISA with HL. Why? Because does not offer LISA and the risk-free £1,000/year opportunity cost far outweighed all other benefits in their back of the enveloppe calculation. The £1,000/year item was even the biggest one and is so for most people.
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Freetrade only just launched the SIPP, which is likely better for everyone than the quite niche LISA. I hope to see it too, but I don’t think they are not listening, there is just a lot to build.
You overcomplicated what was a simple explanation. You first response was about people losing out on £1000 a year specifically because Freetrade doesn’t offer a LISA and toms said you dont lose out as you can open a S&S LISA elsewhere. This is correct, this is correct for any question of this type. The only reason you’d lose out on money is if you were silly enough to not open a LISA when you wanted to open one. The broker is of no consequence, either you want to use that product or you dont.
you’re talking about choice benefit theory and cost benefit analysis like that’s what people do… when people want to open a LISA they google LISA and open one with whichever link looks best at the time, that’s the real world.
Freetrade cant magic a product out of thin air, so as @toms says, if you want to open a LISA then open one, the only way you lose out on the £1k is if you choose not to.
£4k in the LISA, £16k remaining in your ISA allowance
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Why?