Figures from Hargreaves Lansdown, the DIY investment company, show that 22% of LISA holders live in London, followed by the South East, the East of England and the South West.
Sarah Coles, head of personal finance at Hargreaves, said the figures show the importance of the accounts, which include a Government bonus to help first-time buyers onto the property ladder or to use for retirement.
She said: “First-time buyers need all the help they can get. Some can turn to the Bank of Mum and Dad to help them get a much-needed leg up onto the property ladder. However, those whose parents aren’t in a position to help can rely on the Lifetime ISA to step in.”
Consultation begins
Coles was speaking as the Government begins a consultation on the role of the tax-free savings accounts, including whether the LISA is still fit for purpose.
The account was launched by Conservative Chancellor George Osborne in April 2017 as an alternative to pensions and the Help to Buy ISA. Savers can put up to £4,000 per year into a LISA, but must open it before the age of 40 and can only contribute until the age of 50.
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The Government adds a 25% bonus to LISA contributions, so those who put in the maximum contribution receive £1,000 per year from the Government.
However, there are strict conditions about how the money is used. It can either be used to buy a first home (and not for any subsequent property purchases) or can be withdrawn later in life to help pay for retirement. Currently, it can be withdrawn at the age of 60.
There’s a further restriction on the value of the properties a LISA can be used to buy – they can only cost £450,000 or less. If you use the money for anything else, you pay a 25% penalty – effectively costing you more than the Government benefit you have received.
Critics say the £450,000 limit on house purchases needs to be increased and the penalty lowered in order to make the accounts more attractive and useful to those who need them.
Coles said: “We want to see the penalty cut to 20%, so it removes the bonus rather than punishing people for trying to do the right thing.
“The fact that the average first-time buyer property in London now exceeds the £450,000 limit on the value of a property that can be bought with a LISA means 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.”
Where LISAs are used
The Hargreaves Lansdown figures show that LISAs are most popular in the four regions of the UK where property is most expensive.
The average property bought with a Hargreaves Lansdown LISA in 2025 cost £303,884. The average first-time buyer property in the UK costs £245,000, but the average first-time buyer property price in London is £478,000 (according to Land Registry).
Coles said the Treasury Select Committee, which has already scrutinised the role of the LISA and is now doing the same for the ISA system as a whole, is asking whether LISAs risk offering a leg-up onto the property ladder for those who don’t need it.
“On the face of it, the fact that it’s being used to buy more expensive homes could suggest this is the case.
“However, when you look more closely at LISA hotspots, it’s another story entirely. 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,” Coles said, adding that the figures show how helpful the LISA can be to new homeowners who would otherwise be forced to rent.
“They can save or invest up to £4,000 a year and the Government will add another 25% – up to £1,000 a year. 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,” she added.
