Available to those aged 18 or over, there will be no upper age limit, recognising that the age at which a first home is bought is rising.

People saving for their first home through the FTB ISA will be able to save up to a yet-to-be confirmed annual limit, which will count towards their ISA allowance. It can be put towards any home in the UK valued up to a set price cap – that’s expected to remain the same as the current Lifetime ISA (LISA) at £450,000 - and purchased with a legal mortgage. 

First-time buyers will receive the government bonus at the point they are ready to put that money into a mortgage to buy their first home.

Details of the FTB ISA, which once available will replace the current LISA, were revealed as Westminster launched a consultation on the new ISA which will run until mid-August.
The Lifetime ISA is being withdrawn with the government admitting “there is evidence that the product is not working well for many”.

Rebecca William, financial planning divisional lead at Rathbones, says: “A new First Time Buyer ISA could mark a welcome shift towards simplicity in a space that has often felt unnecessarily complicated. 

“The Lifetime ISA tried to serve two masters - helping people save for a home and for retirement - and in doing so it often created confusion rather than clarity.
“A more focused product that is solely geared towards getting on the housing ladder should be easier to understand and use in practice, particularly as it removes the withdrawal penalty that proved so contentious with the LISA.

“While a simpler savings vehicle is a step forward, it doesn’t change the fundamental challenge facing first-time buyers. Younger generations are contending with a double squeeze of high rents and elevated living costs, making it increasingly difficult to build a deposit. As a result, the traditional milestone of homeownership is drifting into the mid-30s for many.”

Rachel Vahey, head of public policy at AJ Bell, believes further details are required before a decision can be made on the merits of the FTB ISA. 

“Today’s consultation gives us the broad shape of the new ‘First Time Buyer ISA,’ but leaves us guessing on some of the most important aspects,” she said. “Without detail on the level of government bonus, subscription limits or property price cap, it is difficult to judge whether this new product will be a meaningful improvement for aspiring homeowners.”