UK residents are being urged not to overlook a government-backed savings boost worth up to £1,000 a year.
The warning comes after the latest HMRC figures showed an estimated 98,450 residential property transactions took place in May – down 2% on April, although still 17% higher than a year earlier because last year’s figures were distorted by changes to stamp duty. Experts say the slowdown could give aspiring buyers a valuable opportunity to build a bigger deposit before taking the plunge.
Sarah Coles, head of personal finance at AJ Bell, said buyers who are delaying a purchase should consider making the most of the Government’s 25% Lifetime ISA bonus.
Under the scheme, eligible first-time buyers can save up to £4,000 a year and receive a Government bonus worth up to £1,000 annually, effectively giving them an instant 25% return on their savings.
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. 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 added that those only expecting to delay their purchase for a relatively short period could also consider putting cash into a high-paying savings account while they continue building their deposit.
The latest property figures suggest the market is beginning to cool after a busy start to the year.
Ms Coles said the annual increase in completed sales paints a misleading picture because it is being compared with a weak period in 2025, when the end of temporary stamp duty relief hit activity.
“The real picture emerges in the monthly figures, with a second consecutive small monthly drop,” she said.
She added that current sales remain “bang in the middle of the pack” compared with the past decade, reflecting deals agreed earlier this year before geopolitical tensions unsettled financial markets.
There are, however, some reasons for optimism. Mortgage rates have fallen in recent weeks as financial markets became more confident that inflation pressures would ease following the ceasefire in the Middle East, improving affordability for some borrowers.
Even so, Ms Coles warned that the outlook remains uncertain, pointing to falling mortgage approvals from the Bank of England and survey evidence from the Royal Institution of Chartered Surveyors showing both buyer demand and agreed sales weakened through the spring.
“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 currently available to people aged between 18 and 39 opening a new account. Savers can contribute up to £4,000 each tax year, with the Government adding a 25% bonus worth up to £1,000 annually, provided the money is used towards buying a first home or for retirement.
The scheme is, however, due to be replaced by a new First Time Buyer ISA from 2028 under Government plans announced last week.