The Government’s much vaunted Help to Buy Isa was on Friday described as a “scandal” after it emerged that first-time buyers will not be able to use it for an initial deposit on their new home.

More than 500,000 savers have opened the accounts after being told by George Osborne, the former chancellor, that it provided “direct government support” for those saving for a deposit, as a way of getting “Generation Rent” on to the housing ladder.

But on Friday it emerged that a flaw in the scheme means a 25 per cent government “bonus” on savings will not be paid out until the sale has completed.

Experts say this renders the scheme technically useless as it is designed for those who are struggling to find the initial outlay involved in buying a home and means they will still be reliant on loans from their parents, if available.