The government's new Isa rules are confusing and fail to understand the reality for young people trying to buy a home, according to Guardian Opinion assistant editor Jason Okundaye.
Complexity Overload
Okundaye describes the reforms to personal savings accounts (Isas) as overwhelming. The Lifetime Isa (Lisa), designed for first-time buyers under 40, will be replaced by a first-time buyer (FTB) Isa by April 2028. The new Isa is only for house purchases, with no upper age limit, but existing Lisa holders cannot transfer funds into the new account. However, transfers from the older help-to-buy Isa are allowed.
Callum Mason, deputy money editor of the i newspaper, said: “It’s hard enough to understand if you cover money for a living – I don’t know how the general public is supposed to do so.”
The Lisa Trap
Okundaye holds a Lisa, which allows saving up to £4,000 per year with a 25% government bonus. However, a £450,000 property cap and a 25% penalty for withdrawals for non-home purchases or properties over the cap make it a financial trap. MPs warned last year that many Lisa savers left with less money than they put in. The cap has remained unchanged since 2017 despite house price inflation, especially in London and the south-east.
New Isa Concerns
Under the FTB Isa, the 25% bonus is paid only when a property is bought, not yearly, and there is no penalty for withdrawing cash for other purposes. Brian Byrnes, Moneybox personal finance director, described the proposals as “more complex, more restrictive and potentially less valuable than the Lisa”. The lost yearly bonus means no compounded interest on the government top-up. The £450,000 cap remains, with the Treasury arguing it ensures support goes to those who need it most.
Okundaye argues this ignores reality: young people are delaying first purchases, often skipping starter homes for more expensive properties. He likens the approach to “buying a bigger bucket without fixing the leak in the roof”.
