Consultation on new First Time Buyer ISA

The Lifetime ISA product (LISA) was introduced in 2017. After a call for evidence in 2025, which was followed by a report by the Treasury Select Committee, the government has concluded that the product is not working well for many due to the unauthorised withdrawal charges. More LISA holders have lost a part of their original savings than have used it to purchase a house, largely due to a lack of understanding about how the product works.

It is therefore proposed to introduce a new First Time Buyers Individual Savings Account (FTB ISA) which will:

• Be available to UK residents over the age of 18, with no upper age limit, solely for the purpose of buying a first home.
• Include a government bonus paid only at the point an individual makes a withdrawal for purchasing their first
  home and after the account has been open for a year. The bonus will be paid as a percentage of subscriptions.
• Have an annual savings limit that will count towards the individual's overall ISA allowance.
• Benefit from the usual ISA tax advantages so that interest and dividends received on the investment are tax-free.
• Be available to be put towards any home in the UK valued up to a set price cap and purchased with a legal
  mortgage. Cash purchases or those using unregulated financing will not be eligible for the government bonus.
• Not be able to receive transfers from LISAs. Funds from the FTB ISA and LISA could, however, be combined and used for the same purchase.

Opening an FTB ISA will be similar to opening a standard ISA. It can be a cash or stocks and shares ISA.

Withdrawing from an FTB ISA will be the same as for a Cash ISA, Stocks and Shares ISA or Innovative Finance ISA with no withdrawal charge.

The proposed subscription limits, property price cap and bonus rate have yet to be determined.

• The LISA price cap is £450,000 on a UK-wide basis.
• The LISA and Help to Buy ISA both have a 25% bonus rate with subscription limits of £4,000 and £12,000.
• The consultation document suggests that a higher bonus rate could apply to the FTB ISA if the subscription limit and price cap are set at lower levels than this.

Responses to the consultation can be emailed to This email address is being protected from spambots. You need JavaScript enabled to view it.. The consultation closes on 18 August 2026.

Useful guides on this topic

ISA guide 
What is an ISA? What are the limits? How are ISAs taxed?

External link

Consultation: First Time Buyer ISA

Question 1: Would you be interested in offering the new First Time Buyer product?

Question 2: How long would it take for you to launch the new First Time Buyer product and when would you start building
it following its announcement?

Question 3: What would the cost implications be and what operational changes would you need to undertake?

Question 4: Should the new First Time Buyer ISA seek to rebalance the relationship between the subscription limit, price
cap and bonus?

Question 5: Should the First Time Buyer ISA adopt a lifetime cap on the bonus received, as well as an annual limit?

Question 6: How could the rules for withdrawal for purchasing a home improve those applying to the Lifetime ISA?

Question 7: Are there any improvements we could make to the approach set out for holders of Help to Buy ISAs and Lifetime ISA looking to use the new FTB product?

Question 8: Do you foresee any issues or complexities from applying cash holding rules to FTB ISAs?

Question 9: Do you foresee any issues or complexities arising from the FTB ISA transfer rules regime set out here?

Question 10: What, if any, additional challenges do you foresee from a consumer and provider perspective for the introduction of a new FTB ISA?