Editor's note: This brief was summarised by The Property AI Newsroom from a report by Guardian Property. Read the original article for full details.

Lifetime Isa Still Available as Government Plans New First-Time Buyer Isa

Experts are advising first-time buyers not to wait for the government’s new first-time buyer Isa, which is expected to launch in 2028, and to consider opening a Lifetime Isa now. The government plans to replace the Lifetime Isa with a new account, but the current product remains available for new savers.

The Lifetime Isa allows individuals aged 18 to 39 to save up to £4,000 a year until age 50, with the government adding a 25% bonus to savings, up to £1,000 per year. The account can be used to buy a first home costing £450,000 or less, or for retirement after age 60. Withdrawals for properties above the price cap incur a 25% charge, which includes some of the saver’s own money as well as the government bonus.

The government has stated that the Lifetime Isa “is not working well for many” and intends to introduce a new first-time buyer Isa that is expected to be simpler, with no upper age limit and no withdrawal charges. However, the new account’s government bonus will be paid as a lump sum at the point of purchase, rather than monthly, and will be based only on the amount paid in, not on any interest or investment growth.

According to the Treasury, it will still be possible to open and save into a Lifetime Isa “indefinitely” under the existing rules until the new product is launched. Industry experts suggest that there is little reason for first-time buyers to delay saving, as the current Lifetime Isa offers financial benefits that may not be matched by the new account.

Letting agents and inventory clerks should be aware that the Lifetime Isa’s property price cap remains at £450,000, unchanged since 2017, despite rising house prices. This may affect the eligibility of some first-time buyers using the scheme.