First-time buyer schemes: what actually helps in 2025/26

Lifetime ISA: the 25% bonus, and its two sharp edges

The Lifetime ISA is the closest thing to free money in the system: open one between 18 and 39, pay in up to £4,000 a year (it counts within your £20,000 overall ISA allowance), and the government adds 25% — up to £1,000 a year, every year until you turn 50. Save £4,000 a year for five years and you have £25,000 before any interest or growth. The account must be open at least 12 months before you use it, and at purchase the money goes from the LISA provider to your conveyancer directly.

The two sharp edges. First, the property must cost £450,000 or less — a cap unchanged since 2017 and increasingly binding in London and the South East; exceed it by a pound and you cannot use the LISA for the purchase at all. Second, withdrawing for anything other than a first home (or age 60, or terminal illness) costs a 25% penalty on the amount withdrawn — which claws back the bonus plus about 6.25% of your own money. £4,000 saved becomes £5,000 with the bonus; withdraw that £5,000 for a non-qualifying reason and you get £3,750 back.

Stamp duty relief: worth up to £11,250 in England

If you (and everyone buying with you) have never owned property anywhere in the world, England’s SDLT first-time buyer relief charges 0% up to £300,000 and 5% on the slice from £300,001 to £500,000. At £300,000 that saves the full £5,000 an ordinary buyer would pay; the maximum saving is £11,250. Above £500,000 the relief vanishes entirely and standard bands apply to the whole price — a genuine cliff edge worth negotiating around if a home is priced near it.

Two traps. Buying jointly with someone who has ever owned — anywhere, including inherited property — loses the relief for the whole purchase. And Wales has no first-time buyer relief at all: its Land Transaction Tax instead starts at a higher £225,000 threshold for everyone. Run your own numbers below.

Sources: GOV.UK — Stamp Duty Land Tax · GOV.UK — Lifetime ISA

Shared ownership, without the gloss

Shared ownership lets you buy a share of a home — typically 25–75%, as little as 10% on newer leases — and pay rent (usually around 2.75% a year of the unsold share’s value) to a housing association on the rest. Your deposit is 5–10% of the share, not the whole home, which is the real appeal: it puts a front door within reach of deposits that could not otherwise buy in the area.

Now the honest part. You pay three things monthly — mortgage, rent, and a service charge — and the rent rises with inflation-linked reviews. You are a leaseholder, and on most leases you carry 100% of repairs and maintenance even while owning 25% of the home (newer model leases add a 10-year initial repair period covering some external costs — check which lease you are being offered). Buying further shares ("staircasing") is possible, and newer leases allow 1% increments with capped fees, but each traditional staircasing round involves a valuation and legal costs. Selling is more constrained than open-market ownership: the association typically has a period to find a buyer first. It is a serious, workable route — best judged as "a cheaper, more secure form of renting with equity upside" rather than discounted full ownership.

First Homes: a real discount, in short supply

The First Homes scheme sells selected new-build homes in England to first-time buyers at a discount of at least 30% (some councils set 40% or 50%) against market value. After the discount the price must not exceed £250,000 (£420,000 in London), household income must be £80,000 or less (£90,000 in London), and councils can add local-connection or key-worker priority.

The catch is not the deal — the discount is genuine and stamp duty is charged on the discounted price — but the design: the same percentage discount binds forever, applying when you sell to the next eligible first-time buyer. That preserves affordable stock but caps your resale market. And supply is thin: First Homes are delivered plot-by-plot through planning obligations on new developments, so availability in any one area is patchy. Worth asking every local developer about; not worth building your whole search around.

What no longer exists — and being honest about substitutes

Two headline schemes are gone: Help to Buy equity loans closed to new applications in England in 2023 (Wales ran its version until 2025), and the Help to Buy ISA closed to new savers in 2019 (existing holders can pay in until November 2029 — though the LISA’s bonus terms beat it for most). If a developer or article mentions either as a live option for new buyers, it is out of date.

Also be clear-eyed about developer incentives dressed as schemes — "deposit contributions", "mortgage subsidies", part-exchange offers. They can be genuinely useful, but lenders treat big incentives as price reductions in disguise and may value the property accordingly. Any incentive worth more than about 5% of the price must be declared and can affect your loan.

Stacking what stacks

The good news: the two best schemes combine. A Lifetime ISA deposit and first-time buyer stamp duty relief work happily together on the same purchase (LISA cap £450,000; full SDLT relief only below £500,000 — both fit most first homes outside prime London). Shared ownership can also be bought with a LISA if the total property value is within the cap.

For personalised, regulated guidance on which combination suits your finances, MoneyHelper is the government-backed starting point, and for shared-ownership lease questions the Leasehold Advisory Service offers free advice. Confirm any scheme detail with your solicitor before exchanging — eligibility rules are rigid, and discovering a breach at completion is expensive.

Sources: GOV.UK — shared ownership · GOV.UK — First Homes · Leasehold Advisory Service