The Government has launched a consultation on a new First Time Buyer ISA that would replace the Lifetime ISA (LISA), after concluding that the existing product is not working well for many savers.
The consultation, published by HM Treasury on 23 June 2026, sets out the broad shape of the account but leaves several of the figures that determine its value still to be decided. It closes on 17 August 2026 while the new product is expected to launch in April 2028.
The First Time Buyer ISA would be a savings account aimed solely at helping people buy their first home. As with the LISA, savers would receive a government bonus on their contributions, but the way that bonus is paid would change.
Rather than being added to the account each year, it would be paid only when the money is used to buy a qualifying property. The bonus would be calculated on the amount paid in, less any withdrawals, and not on any investment growth.
The account would carry no upper age limit, so anyone aged 18 or over could open one. A purchase would have to be made with a regulated mortgage to qualify and the account would need to have been open for at least 12 months before a bonus could be claimed. Cash and stocks and shares versions would both be offered.
The most significant change is the removal of the withdrawal penalty. Under the LISA, savers who take their money out for any reason other than buying a first home or after reaching age 60 lose the government bonus and forfeit a further 6.25% of their own savings.
Because the new bonus would stay with the Government until a purchase takes place, savers could withdraw their own contributions without that charge, though they would lose the bonus attached to any money taken out. This also has the knock-on effect of reducing the potential interest earnings or investment growth while the pot accrues – something that is a valuable part of the current LISA which pays the bonus regularly.
What we don't yet know
Several of the most important details have not been confirmed. The Treasury has not set the annual subscription limit, the property price cap, or the percentage used to calculate the bonus. These are expected to be announced at a future fiscal event.
Until they are, the account cannot be fully compared with the LISA. The property price cap is expected to match the current £450,000 limit, but this is yet to be confirmed. That figure has not changed since the LISA launched in 2017, despite house prices rising since. A lower or unchanged cap could limit the account's usefulness in higher-value areas such as London and the South East.
The Treasury has also not said what the change means for self-employed people and others without a workplace pension, who have used the LISA as a flexible way to save for later life. The new account is for home purchase only, so that retirement option would not carry across.
What this means for you
For anyone saving towards a first home, this is worth being aware of, though there is no need to act on it yet. The product is still at consultation stage, the launch is not expected until April 2028, and the figures that will determine how generous it is have not been published.
If you already hold a LISA or a Help to Buy ISA, your existing account and its rules continue as they are for now and you can keep contributing. Whether the new account will suit you better will depend on the bonus rate, contribution limit and price cap once those are confirmed.
If you have any questions about how this might affect your savings or your plans to buy, please do get in touch.