‘We got £3,000 of free cash for our first home’

Many first-time buyers are taking advantage of the Lifetime Isa bonus, but more are missing out. Laura Suter reports

First-time buyers are missing out on £9.4bn of extra cash as fewer than 2pc of those eligible are using a new type of Isa aimed at this group. Launched in April last year, the Lifetime Isa gives those saving for a first home up to £1,000 each year towards their house purchase.

Savers aged 18 to 39 can put up to £4,000 into the Lifetime Isa each tax year, with the state adding 25pc to the pot. However, research from savings app Moneybox found that while 9.5 million Britons were potential first-time buyers, only around 150,000 had opened a Lifetime Isa.

Ben Stanway of Moneybox said: “First-time buyers are missing out on billions of pounds that could be going towards home ownership. Many will be saving the £4,000 needed to claim the maximum bonus elsewhere, so opening a Lifetime Isa makes perfect financial sense.”

The earliest Lifetime Isa savers have just received their first bonus, with broker Hargreaves Lansdown estimating that the average payout per saver was £812.

The bonus will now be paid monthly, but for the first year of the Lifetime Isa it was paid in a lump sum at the end of the tax year. Lifetime Isa holders need to have the account for 12 months before they can use it to buy a home, so the first couples are only now able to buy a property with it.

Thomas and Natasha Gibby, 28, will be among the first people in Britain to use the Lifetime Isa to buy a property. They are due to complete on their £410,000 Hertfordshire home next week, using £3,000 of Lifetime Isa bonuses to boost their deposit.

Mr Gibby, a lawyer, said they knew that they would have to hold the Lifetime Isa for 12 months before they could use it to buy a property, so were among the first to open the accounts when Hargreaves Lansdown started to offer them in April last year.

Mrs Gibby, who works in human resources, already had a Help to Buy Isa worth almost £4,000, which she

‘We work in London but couldn’t afford to buy there’