New ISA consultations

You may have seen the headlines: the Lifetime ISA is being scrapped. The full story is better news than it sounds, and if you are a tenant saving towards your first home, it is worth five minutes of your time.

On 23 June 2026, the government launched a consultation on a brand new savings product: the First Time Buyer ISA. Once it arrives, it will be offered in place of the Lifetime ISA. Here is what we know, what we do not know yet, and what you might want to, or not do about it.

First, the most important thing: do not panic

If you already have a Lifetime ISA, nothing changes. You can keep it, keep paying into it, and keep earning your 25% government bonus of up to £1,000 a year, under the existing rules, indefinitely. The government has said so.

Importantly, if you take money out of a Lifetime ISA for anything other than a qualifying first home purchase or retirement from age 60, you still lose 25% of what you withdraw. So closing your account in a hurry because of a headline would hand a slice of your own savings straight back to the Treasury.

You can also still open a new Lifetime ISA right up until the new product launches, if you are eligible.

Why is the Lifetime ISA going?

Because, in the government's own words, it is not working well for many. The evidence is stark: more people have lost part of their savings to the withdrawal charge than have used the product to buy a home. Unauthorised withdrawals hit 8% of all accounts opened in 2024/25, often because people fell on hard times and needed their own money back.

Add the confusing dual purpose (home deposit or retirement pot, pick carefully), the age 40 cut-off for opening one, and the fact that many high street banks refused to offer it at all, and a redesign was overdue. 

What the First Time Buyer ISA will look like

The new product does one job only: helping you buy your first home. The proposed design has some genuine improvements.

No withdrawal penalty. This is the big one. If life happens (redundancy, illness, a change of plan) you can take your money out without losing a penny of it. The government bonus is simply paid later, at the point you actually buy, rather than dangled upfront and clawed back with interest if you blink.

No upper age limit. Anyone aged 18 or over can open one. This matters enormously. At tenant2owner, we are now approached by more prospective first time buyers in their sixties than in any other age group. The old idea that first time buyers are all in their twenties belongs in a museum, and it is refreshing to see product design catch up.

Cash or Stocks and Shares versions. Both will be available, and any growth or interest is tax free, as you would expect from an ISA.

Your bonus is based on what you pay in. The bonus will be calculated on your net subscriptions (what you have put in, minus anything you have taken out), not on investment growth.

You will need a mortgage. The bonus is only paid where the home is bought with a legal mortgage. Cash purchases and unregulated financing arrangements will not qualify. The product is aimed at people who need help getting onto the ladder, not those who are already over the wall.

One year before the bonus. The account must be open for at least 12 months before a bonus can be claimed. If the final rules mirror this, the familiar tip will apply again: opening early, even with a small amount, starts the clock.

What about my existing Lifetime ISA or Help to Buy ISA?

You will not be able to transfer a Lifetime ISA into the new product (you have already had bonuses on that money), but you will be able to use both pots towards the same purchase. Hold both, buy with both. You will only be able to pay into one of them in any single tax year, though, so a little housekeeping will be needed.

Help to Buy ISA holders are proposed to be able to transfer into the new product, up to its subscription limit.

And whatever price cap is eventually set, the government has said the caps across all three products will be aligned so that nobody loses out.

What we do not know yet

The three numbers that matter most: the annual subscription limit, the bonus rate, and the property price cap. All are to be announced at a future fiscal event. For reference, the Lifetime ISA allows £4,000 a year with a 25% bonus and a £450,000 price cap. The consultation hints that a more generous bonus could come at the price of a lower cap; our view is that the £450,000 cap has already been frozen since 2017 and should not be cut, particularly for buyers in London and the South East.

There is also no confirmed launch date. Until there is one, the Lifetime ISA remains the only game in town for a bonus on first home savings.

What should you do now?

It’s never a crime to keep saving. Nothing about this announcement should slow you down. If you have a Lifetime ISA, it keeps working exactly as before. If you are eligible and were considering opening one, you still can. And whichever wrapper your deposit sits in, the fundamentals of getting mortgage-ready (your credit record, your paperwork, your rent payment history) matter far more than the label on the account.

Have your say

Here is the part most people skip, and should not. This is a live consultation, and the government has said it particularly wants to hear from prospective first time buyers, not just banks and industry bodies. You are precisely who this product is for.

The consultation closes in mid August 2026 (the government's newsletter says 11:59pm on 17 August; the consultation document says 18 August; we would treat 17 August as the safe deadline). 

Responses go by email to ftbisaconsultation@hmtreasury.gov.uk, and you can read the full consultation on GOV.UK by searching "First Time Buyer ISA consultation".

You do not need to answer every question. Even a short email saying what would make this product work for you, on the price cap, the bonus, or anything else, counts.

This article is for general and education only. It is not financial advice, and the figures reflect proposals under consultation which may change. Always check the current rules on GOV.UK before making decisions about your savings.