Brits are being encouraged not to miss out on a government-backed savings incentive worth up to £1,000 annually. The alert follows the latest HMRC data revealing an estimated 98,450 residential property transactions occurred in May – a 2% decrease from April, though still 17% higher than the previous year because last year's figures were affected by stamp duty changes.
Experts suggest the slowdown could provide prospective buyers with a valuable chance to accumulate a larger deposit before committing. Sarah Coles, head of personal finance at AJ Bell, said buyers who are postponing a purchase should consider maximising the Government's 25% Lifetime ISA bonus, which is paid via HMRC.
Through the scheme, eligible first-time buyers can save up to £4,000 annually and receive a Government bonus worth up to £1,000 each year, effectively delivering an instant 25% return on their savings.
Golden Opportunity for Savers
Ms Coles said: "It means buyers are in no rush to take the plunge right now. If you're in this position, it's a golden opportunity to consider your savings." She added: "Not only will building your savings potentially put you in a better position when you're buying, but having a robust safety net is essential to get you through the expense of a move, and the inevitable extra costs when you move in somewhere new."
She suggested that people planning to postpone their purchase for a fairly brief timeframe might also look at placing funds into a high-interest savings account while they carry on accumulating their deposit. The most recent property data indicates the market is starting to slow following a buoyant beginning to the year.
Market Slowdown and Deceptive Figures
Ms Coles stated the yearly rise in completed transactions presents a deceptive impression because it's being measured against a sluggish period in 2025, when temporary stamp duty relief concluded and impacted activity. "The real picture emerges in the monthly figures, with a second consecutive small monthly drop," she said.
She noted that present transactions remain "bang in the middle of the pack" compared with the past decade, representing agreements reached earlier this year before geopolitical tensions disrupted financial markets.
Positive Signs and Uncertain Outlook
There are, nevertheless, some grounds for positivity. Mortgage rates have declined in recent weeks as financial markets grew more assured that inflationary pressures would diminish following the ceasefire in the Middle East, enhancing affordability for certain borrowers.
Despite this, Ms Coles cautioned that the outlook continues to be uncertain, highlighting declining mortgage approvals from the Bank of England and survey findings from the Royal Institution of Chartered Surveyors demonstrating both purchaser demand and agreed transactions weakened throughout the spring.
Investment Options and Future of Lifetime ISA
"Those thinking about waiting a while longer to purchase a home could even consider investing their money," she said. "This could be through a Stocks and Shares ISA or by using a Lifetime ISA and benefitting from the 25% government bonus on top of contributions up to £4,000 per year."
The Lifetime ISA is presently accessible to people aged 18 to 39 opening a new account. Savers can deposit up to £4,000 each tax year, with the Government contributing a 25% bonus worth up to £1,000 annually, as long as the funds are used towards purchasing a first home or for retirement.
However, the scheme is set to be replaced by a new First Time Buyer ISA from 2028 under Government proposals announced last week.
