Savers pay the £575 price as Lisa pitfalls hit home

Thousands of savers have paid an average of £575 for withdrawing money early from savings accounts intended to help young people buy a home.

The Lifetime Isa (Lisa) was launched in 2017 and comes with a 25pc government bonus, making it one of the most lucrative ways for potential first-time buyers to save.

But those who take out money without buying a home, perhaps for an emergency or because their plans have changed, must pay an effective 6.25pc penalty as well as losing the bonus.

Data from providers with 43,000 customers shows that thousands have paid penalties, which total £790,000. AJ Bell said 375 of its customers had paid an average of £240, while Nutmeg said 1,000 savers had been charged an average of £700.

But the penalty is not the only pitfall for savers. The value of a property that can be bought with the help of a Lisa is capped at £450,000. This has not changed since the account’s launch, meaning some savers could be prevented from buying, particularly in London and the South. Another obstacle is that the account must be opened and a deposit made within 12 months in order to qualify for the bonus. Laura Suter of AJ Bell said newly married women could face delays. Providers send requests for the bonus to HMRC, which checks them against official records. Someone who has recently changed their name could face problems, as discrepancies will cause delays. A maximum of £4,000 can be saved each year; the money is tied up until savers buy a home or reach 60.

1,375 The number of savers who have paid the penalty with two leading Lisa providers