The Lifetime ISA (LISA) is playing a vital role in helping first-time buyers access some of the UK’s most expensive housing markets, according to Hargreaves Lansdown, which is calling for key reforms ahead of the forthcoming Government ISA consultation.
New figures from HL show that the average property purchased using its Lifetime ISA so far in 2025 cost £303,884 – significantly above the UK’s average first-time buyer price of £245,000 and closer still to the average price in London, which stands at £478,000 according to the Land Registry.
Over a fifth (22%) of HL LISA holders live in London, making it the region with the highest concentration of clients. This is followed by the South East (17%), East of England (13%), and the South West (10%) – regions where house prices remain among the steepest for new buyers.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The average property bought with an HL LISA so far this year cost £303,884 – a quarter more than the average property bought by a first-time buyer.
“If the forthcoming ISA consultation explores the same ground as the Treasury Select Committee, it could ask whether the LISA offers value for money for the Government. This figure is a clear sign of the enormous value the LISA offers in property hotspots.”
Coles added that this isn’t evidence the scheme favours wealthier buyers. Instead, it highlights the acute affordability pressures facing younger people in high-cost areas: “What this figure actually shows is how hard it is to buy a home in the UK’s property hotspots, especially London and the South East.”
She pointed out that average household incomes in these regions are higher – £42,433 in London and £50,682 in the South East compared to a UK-wide average of £41,495 – but younger earners remain stretched by high rents and elevated house prices. The average rent in London now stands at £2,166, more than double the UK average outside the capital, according to Zoopla.
With 32% of London households now renting, up from 28% four years ago, Coles said the Lifetime ISA continues to provide critical support: “It’s one of the few ways that those whose parents with less available cash can buy a place of their own, and so is incredibly valuable for younger people.”
HL is urging the Government to use the upcoming consultation to address key flaws in the product’s structure, including the punitive 25% withdrawal charge. “The 25% penalty for accessing money for purposes other than buying a first home or for retirement not only removes the effect of the Government bonus, it also applies a 6.25% penalty on people’s hard-earned savings,” Coles said. “We want to see the penalty cut to 20%.”
HL is also calling for the £450,000 property limit to be linked to regional property values, particularly given that buyers in London frequently exceed the current cap. “The government should revisit the limit, and introduce a link to property prices, so buyers don’t lose the chance to use their LISA through no fault of their own,” she added.
Additional recommendations include extending the age limit for opening a LISA to 55 and reducing withdrawal penalties to support self-employed savers. HL data shows just 21% of self-employed households are on track for a moderate retirement income, compared with 43% of employed households.
Coles concluded: “Cutting the penalty to 20% would encourage those who are hesitant to tie their money up because of variable earnings. In addition, if people could open a LISA up until the age of 55, analysis from the HL Savings and Resilience Barometer has shown this would help 70% of the self-employed who missed out on the LISA because they were too old when it launched.”
