Lifetime ISA property price limit

If you want to use a Lifetime ISA to buy your first home, the property has to cost £450,000 or less. That is the rule set by the government, and it applies in every part of the UK: London, the South East, Scotland, Wales and Northern Ireland all use the same figure¹.

The cap is a condition of the penalty-free withdrawal, not a limit on what you can buy. A home above £450,000 is still a home you can purchase. What changes is that the Lifetime ISA money stops being the cheap way to fund it, because taking the money out for that purchase triggers a 25% government charge³.

The £450,000 figure has been in place since the Lifetime ISA launched, and it is not varied by region or by local house prices. The cap is written into the rules for a first home purchase: the property costs £450,000 or less¹. A Treasury committee concluded that the house price cap ensures that Government spending supports those who need financial assistance the most⁵.

The £450,000 limit applies in every part of the UK

The Lifetime ISA property cap is a single national figure. Official guidance states that the property must cost £450,000 or less, and the government's own savings statistics describe the limit as £450,000 in all areas of the UK¹. NS&I sets it out the same way for its own customers, as does the model conveyancer declaration used when a solicitor releases the money⁵.

That is worth pausing on, because the older Help to Buy: ISA worked differently. Its bonus was available on a home costing up to £250,000, or up to £450,000 if the property was in London¹². The Lifetime ISA removed that regional split. A buyer in London and a buyer in Aberdeen both work to £450,000².

The practical effect is that the cap bites hardest where house prices are highest. A first-time buyer in a cheaper part of the country may never come close to it. A first-time buyer in London or the South East may find that £450,000 buys less than they need, and that the Lifetime ISA is therefore not usable for the home they actually want¹⁴.

The cap is also fixed in cash terms. It is not uprated each year in line with house prices, and no indexation is set out in the published rules. The £450,000 figure that applied when the account was introduced is the figure that applies now: the property costs £450,000 or less¹, and the model conveyancer declaration states the purchase price cannot be more than £450,000³.

What the price cap means for withdrawing your savings and bonus

A Lifetime ISA holds your own money plus a government bonus, and the bonus is what makes the account attractive. The withdrawal rules decide whether you keep it.

For a first home, the account holder can withdraw up to 100% of the Lifetime ISA balance, including the government bonus, up to the value of the deposit, with no minimum amount¹⁵. The amount withdrawn cannot be more than the purchase price of the property⁶. The property must cost £450,000 or under, and the purchase must be made with a mortgage¹.

If those conditions are met, the withdrawal is penalty-free. If they are not, the money is treated as an early withdrawal. A 25% government charge applies to withdrawals that are not for a first home within the cap, or for retirement³. The charge is deducted from the amount withdrawn, so it takes back the bonus and part of the saver's own money.

The other penalty-free route is age. Savings can be taken out of a Lifetime ISA from age 60 for any purpose, tax-free¹⁷. That route has no property price condition attached, which matters for anyone whose first home ends up costing more than the cap: the account is not wasted, it simply becomes a retirement pot rather than a deposit.

Buying with someone else: the limit is on the property price

Two first-time buyers can each use a Lifetime ISA on the same purchase. The rule is that you can combine your Lifetime ISAs to buy a property together, so long as the property price is less than £450,000¹⁸. Two Lifetime ISAs can be used to buy the same house, but the price of the house cannot be higher than £450,000¹⁹.

The cap is on the property, not on each person's share. The model conveyancer declaration states that the maximum purchase price of £450,000 applies irrespective of whether it is a sole or joint purchase⁶. You can combine your Lifetime ISAs to buy a property together, so long as the property price is less than £450,000¹⁰, so a joint purchase above that figure breaches the cap even where neither buyer's own savings exceed it.

The rules on who you buy with are otherwise wide. Funds can be used with other purchasers who may or may not be first time purchasers, with no limit on the number of individuals who can buy a single residential property; as joint owner with another person who may already own the property; or as joint owner with one or more individuals who will use funds held in their own Lifetime ISA⁶. If the person you are buying with has a Lifetime ISA, you can both use your savings and government bonus, but you must both be first-time buyers and meet all the conditions¹.

One restriction sits outside the price cap. A first-time residential purchase will not qualify as a withdrawal from a Lifetime ISA if the purchase is funded by a loan from a person who is connected to the account investor²⁰. A loan from a family member towards the purchase can therefore take the withdrawal outside the first home rules.

Where the £450,000 limit rules out a penalty-free withdrawal

The cap creates a cliff edge. At £450,000 the withdrawal is penalty-free; above it, the 25% charge applies to whatever is taken out¹. There is no taper and no partial relief.

That has drawn criticism. The Lifetime ISA has been described as having hampered certain house-buyers from accessing the government bonus because their property was too expensive¹⁴. The Treasury committee's own framing is that the cap exists to direct government spending to those who need financial assistance the most⁵, which is the policy reason the limit is set where it is.

For a saver, the arithmetic of breaching the cap is straightforward to see in principle: the charge is 25% of the amount withdrawn, and it is taken by the government. The account holder keeps the rest, but the bonus is gone and part of their own savings with it.

There are two ways to avoid that outcome. One is to buy a property at or below £450,000. The other is to leave the Lifetime ISA alone, buy the more expensive home with other money, and keep the Lifetime ISA for retirement, where withdrawals from age 60 are tax-free¹⁷. The account can stay open and keep receiving contributions, since the £4,000 annual subscription limit runs until the account holder reaches 50⁴.

Lifetime ISA to be replaced by a First Time Buyer ISA

The Lifetime ISA is being replaced. The government has said that once available, a new product will be offered in place of the Lifetime ISA²², described as a new, simpler ISA product to support first-time buyers to buy a home⁹. A consultation on the First Time Buyer ISA was published on 23 June 2026¹⁰, and there are proposals that Lifetime ISAs will be replaced by a new first time buyer product from April 2027¹¹.

The consultation covers how the new product should work. The government has said it will consult on introducing a new, first time buyer only product that will provide the bonus when a person uses it to buy a house, removing the need for a withdrawal charge⁸. That last point is the significant one for anyone worried about the £450,000 cap: the design aim is to remove the charge that currently punishes a purchase above the limit, rather than to raise the limit itself.

Nothing published so far sets a replacement property price figure. Until the new product exists, the £450,000 cap continues to govern Lifetime ISA withdrawals.

Existing accounts are not being shut down. It will remain possible to open a Lifetime ISA until the new product becomes available, and for account holders to continue to save into a Lifetime ISA in line with the existing rules²². The £4,000 annual subscription limit is unchanged until April 2031⁷. The Lifetime ISA allowance for the 2026/27 tax year is £4,000, within the overall £20,000 ISA allowance⁸.