The government has today launched a consultation on the implementation of a new First Time Buyer ISA (FTB ISA) to replace the Lifetime ISA (LISA).
Commenting, Rebecca Williams, 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.
“However, this comes at the expense of the Lifetime ISA, which did offer under‑40s another tax‑efficient route to build savings for later life. One of its key advantages was that withdrawals from age 60 are completely tax free - a notable contrast to pensions, where typically only 25% can be taken tax-free. Yet from our experience, the product often flew under the radar and was poorly understood by many savers.
“For most people, pensions remain the cornerstone of retirement saving. They benefit from tax relief at their highest marginal rate, and workplace schemes often include employer contributions - effectively free money that boosts long-term outcomes. When combined with the power of compounding over time, these features can make a significant difference to retirement wealth.
“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‑thirties for many.
“That in turn is placing growing strain on the Bank of Mum and Dad, with many parents stepping in to help their children onto the ladder - often at the expense of their own financial plans. These pressures are particularly acute for the sandwich generation, who are balancing day‑to‑day costs while supporting both children and ageing parents. Our research shows that 60% expect to delay retirement as a result.”
Property is a home, not necessarily an investment
Rebecca Williams adds: “It’s also important to remember that while property plays a central role in people’s lives, it is first and foremost a home - not necessarily a reliable investment. Our latest research shows UK house prices rose just 1.7% last year - only around half the pace of inflation - meaning values fell in real terms. Over the same period, a simple equity portfolio delivered significantly stronger returns, highlighting how property has underperformed other assets in the short to medium term.”
