Lifetime ISA Is Being Replaced: What to Do Now

If you've been saving in a Lifetime ISA to help buy your first home, a significant change is on the horizon. On 23 June 2026, the government released consultation proposals to replace the Lifetime ISA with a brand-new First-Time Buyer ISA — and MoneySavingExpert founder Martin Lewis has been at the forefront of making sense of what it means in practice.

The changes are not yet law. But with a consultation deadline in mid-August and a possible launch date of April 2027, first-time buyers need to understand their options now — especially if they're actively saving or planning to buy in the next year or two.

Why the Lifetime ISA Is on Its Way Out

The Lifetime ISA has long been a source of frustration. In theory, it was a great idea: save up to £4,000 a year, receive a 25% government bonus, and put it towards a first home. In practice, a rigid property price cap — set when the product launched and never meaningfully updated — has left many buyers unable to use the bonus they spent years building up, particularly in London and the South East where property values have risen well beyond the cap.

The government's view is that the LISA is no longer fit for purpose for first-time home buyers. The proposed First-Time Buyer ISA is intended to fix that, focusing exclusively on property purchases — unlike the LISA, which also covers retirement saving — with modernised price thresholds.

How the New First-Time Buyer ISA Would Work

Under the consultation proposals, the new First-Time Buyer ISA would work as follows:

• Both cash and stocks & shares versions would be available
• A government bonus would be paid at exchange of contracts — not at completion
• Property price caps would apply, but specific figures are yet to be confirmed
• Help to Buy ISAs could be transferred into the new product
• Contribution rules would be more flexible than the current LISA structure

The detail that will matter most to buyers — and to solicitors managing the conveyancing process — is the timing of the bonus. Paying the bonus at exchange of contracts, rather than completion, is a meaningful change. Exchange is the point at which both parties become legally committed to the transaction. Having the bonus funds available at that stage, rather than on completion day, gives buyers and their solicitors more certainty when managing the financial elements of the purchase.

What Happens to Your Existing Lifetime ISA

If you already hold a Lifetime ISA, the news is reassuring. Existing LISAs will remain open and continue to function normally even after the new scheme launches. You will not be forced to transfer or close your account.

The key limitation is that existing LISAs cannot transfer into the new First-Time Buyer ISA — because they have already received government bonuses under the old rules. Help to Buy ISAs, which have not, can make the transfer.

This means there is a genuine decision point for first-time buyers currently saving in a LISA:

Is your target property likely to fall within the existing LISA property price cap?
If not, might waiting for the new scheme — with potentially higher thresholds — be worthwhile?
How much bonus have you accumulated, and would it be better to use the LISA now while the existing rules apply?

There are no straightforward answers until the new scheme's property price caps are confirmed, which should happen after the August consultation closes.

What First-Time Buyers Should Do Right Now

In the short term, existing LISA and Help to Buy ISA savers should continue contributing — bonuses keep accruing, and nothing changes before April 2027 at the earliest. Stopping contributions now would simply mean missing out on bonus payments unnecessarily.

For those who haven't yet opened an ISA for a first home purchase, it is worth waiting for confirmation of the new scheme's property price caps and bonus rates before deciding which product suits your situation. Further details should follow the close of the consultation in mid-August.

Regardless of which savings product you use, getting conveyancing-ready early pays dividends. First-time buyers often underestimate the lead time involved: finding a solicitor, completing identity verification, gathering financial documents, and understanding the legal process all take time. Starting those conversations well before you're ready to make an offer means the legal work won't slow you down when the right property appears.

What Should You Do Next?

If you're working towards your first home purchase — whether that's months away or just getting started — speaking to a conveyancing solicitor now is one of the most useful steps you can take. QualitySolicitors' first contact team can connect you with a specialist conveyancing solicitor in your area who can walk you through what to expect, help you prepare, and be ready to move quickly when you find the right property.