Replacing the Lifetime ISA (LISA) with a new first-time buyer savings product could have significant implications for buyers and property professionals alike warns a Legal 500 firm.
Beswicks Legal says the government consultation, which includes reviewing the £450,00 property price cap, is a conveyancing risk already affecting transactions on the ground.
Sophie Ellis, conveyancing and property solicitor, Beswicks Legal, said: “We are increasingly seeing first-time buyers caught out by the £450,000 LISA cap late in the transaction process.
“When a purchase price exceeds the threshold, even marginally, buyers can face losing part of their government bonus, or reconsidering the purchase altogether. At that stage, it becomes a transaction risk, not only an issue of budgeting.”
While reform may be welcomed in principle, uncertainty during the consultation and transition period could create hesitation among buyers currently saving into LISAs, says Ellis.
“If the government does move to a replacement product by 2028, clarity on transitional arrangements will be critical,” she added. “Buyers making long-term savings decisions today need certainty about how their funds can be used in two or three years’ time.”
Currently, first-time buyers can benefit from stamp duty relief on properties up to £500,000, yet LISA withdrawals remain capped at £450,000. According to Sophie, this misalignment adds unnecessary complexity to affordability planning.
“We now have a situation where a buyer may qualify as a first-time buyer for stamp duty purposes but still be penalised under the LISA rules,” she said. “That inconsistency creates confusion and, in some cases, delays while buyers reassess their position.”
According to a 2025 Treasury Select Committee report, the LISA’s dual-purpose design as both a retirement and home buying savings product may have been diverting people away from more suitable products and putting part of their savings at risk. Since its inception in 2017, 6% of eligible adults have opened a LISA, with around 1.3 million accounts still open.
