A third of London purchases exceed LISA price cap

Pressure is mounting on ministers to make sure its Lifetime ISA (LISA) replacement reflects the modern housing market.

The LISA lets first-time buyers save for a mortgage deposit tax-free and provides a 25% bonus from the Government.

But there are price caps on the value of the property that can be purchased.

More than a third – at 34% – of London’s first-time buyer purchases have exceeded the LISA’s £450,000 property price cap in 2026, up from 25.7% when the product launched in 2017, reports reallymoving.

The Government should also consider a separate, higher cap for London, following the precedent set by the Help to Buy ISA.”

The 8.3 percentage point increase highlights the growing gap between the cap, which has not changed since 2017, and the cost of buying a first home in the capital.

The comparison site for home movers is urging the Government to use the Autumn Budget to confirm the details and launch timetable of the proposed First Time Buyer ISA, which is intended to replace the existing LISA product, including an updated property price cap that reflects today’s property prices.

A total of 8.1% of first-time buyer purchases have exceeded the price cap so far in 2026, according to the research, compared with 4.7% when the LISA launched in 2017.

London at 34%, the South East at 10.8% and the East of England at 7.3% have the highest proportion of purchases above the limit. These buyers cannot use Lifetime ISA savings towards their purchase without incurring a withdrawal charge.

Reallymoving’s analysis found that increasing the existing £450,000 national property price cap in line with house price inflation since 2017, based on the Land Registry’s UK House Price Index, would bring it to approximately £597,000, an increase of almost £147,000 – or 33%.

Rob Houghton (pictured), Chief Executive of reallymoving, says: “Despite relatively weak house price growth in London since 2017, the fact that more than a third of first time buyer purchases in the capital now exceed the LISA price cap highlights the extent to which a single national cap disadvantages buyers in more expensive regions.

“The Government must ensure the new First Time Buyer ISA reflects the housing market buyers are navigating today.

“We’re urging the Chancellor to confirm the details and the launch timeline in the Autumn Budget and commit to a higher price cap, with regular reviews going forward.

“The Government should also consider a separate, higher cap for London, following the precedent set by the Help to Buy ISA, to reflect the higher prices faced by buyers in the capital.”