Hargreaves Lansdown says that Lifetime Individual Savings Accounts (Lisas) should have their limit raised and withdrawal penalty lowered.

This comes after government data released today shows that 50,800 people utilised their Lisa to buy a home in 2021/22, which is 15,000 on the tax year before.

And the average withdrawal grew too – by £700 to £13,192.

Currently, anybody who takes money from their Lisa for any reason other than buying a first home for £450,000 or less or for retirement incur a 25% charge.

Hargreaves Lansdown senior pensions and retirement analyst Helen Morrissey says: “For many first-time buyers, particularly in the South-East, the current limit of £450,000 for a first time home is becoming increasingly difficult to manage.

“We would ask the government to revise the current £450,000 limit in light of house price rises in recent years and also look at reforming the current 25% withdrawal penalty.

“During the pandemic the penalty was reduced to 20% which meant that people withdrawing from their Lisa lost the government bonus but kept their savings. Reinstating the 20% would be a fair approach.”