Help to buy ISA with BTL property?

y.pango

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Hi all,

It's my first post on MSE, but I've been using this website for years for various reasons and love it due to excellent information provided and community support. Thanks all!

My question is regarding the new help to buy ISA that will be available later in the year and whether I will be eligible for this if I own a buy-to-let (BTL) investment property in UK?

What is the definition of a first-time buyer?
A first-time buyer is someone who does not and has never owned an interest in a residential property, either inside or outside the UK.
Many people have said "I owned a property previously but now rent", "I have a shared ownership property" or "I have inherited a property" can I still open a Help to Buy ISA? And the answer is NO - you have to be a first-time buyer to open one.

eskbanker

Welcome aboard!

Although I think it's fair to say that the exact rules of this scheme are still subject to some finessing as we head towards launch, to me it's self-evident from your quoted text that you wouldn't be eligible - if you already own a property then you're not a first-time buyer, based on the definition you quote, although that does seem to be MSE wording rather than official government text as far as I can see.

Are you thinking of some loophole not apparent to the casual reader, the specification of 'residential' perhaps?

masonic

There are some possible exceptions where you might still be classed as a first time buyer. For example, you invested in non-residential property (office block, factory, warehouse etc), or you invested indirectly in residential property through an investment company or through some sort of investment vehicle. If you are a traditional BTL investor who has simply purchased a property that you have rented out to residential tenants then I think you are out of luck.

MARTYM8`

The apparent definition is below.

"A first-time buyer is someone who does not and has never owned an interest in a residential property, either inside or outside the UK."

How they will be able to verify this of course is another matter - particularly as EU citizens will be eligible. Does HMRC have access to historic property ownership databases in Slovakia or Romania going back decades?

y.pango

Hi All,

Thanks for the responses. I'm not trying to find a loophole and am simply trying to get some clarity.

That's unfortunate... I was always under the impression that BTL vs Residential properties are very different, just as BTL vs Residential mortgages are very different. Because London is outrageously expensive, I haven't purchased a "residential property" and instead, decided to invest in a comparatively cheap BTL (Interest Only) property else where in UK and continued to rent in London where I work. As I'm still no where close to affording a property in London, this ISA scheme would somewhat help. Anyone have an idea who I can attempt to reach out to to find out?

(Sorry about the delay... I thought I had subscribed to this and was expecting an email alert)

eskbanker

y.pango wrote: »

I was always under the impression that BTL vs Residential properties are very different, just as BTL vs Residential mortgages are very different.

I think you're interpreting 'residential' as meaning your primary residence, whereas my understanding of the MSE definition of 'residential' is that it's as opposed to 'commercial' (i.e. industrial units, factories, etc). In other words, unless it's a commercial property, your current one would be considered residential and BTL not either/or, in my opinion.

y.pango wrote: »

As I'm still no where close to affording a property in London, this ISA scheme would somewhat help

Although every little helps and all that, the proposed maximum government contribution is only £3K, better than nothing but unlikely to make a really significant difference to purchasing power in London.

y.pango wrote: »

Anyone have an idea who I can attempt to reach out to to find out?

I believe the details are still work in progress, I found https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/413899/Help_to_Buy_ISA_Guidance.pdf from March, which includes "Next steps The government will work with the industry to finalise the operational details of the scheme" but can't find anything more recent that looks official....

bowlhead99

y.pango wrote: »

That's unfortunate... I was always under the impression that BTL vs Residential properties are very different, just as BTL vs Residential mortgages are very different. Because London is outrageously expensive, I haven't purchased a "residential property" and instead, decided to invest in a comparatively cheap BTL (Interest Only) property else where in UK and continued to rent in London where I work. As I'm still no where close to affording a property in London, this ISA scheme would somewhat help. Anyone have an idea who I can attempt to reach out to to find out?

Any one of the ISA providers offering that type of ISA will be able to tell you the rules once their product is available.

The ISA is only available to those who have not owned residential property and are going to use the funds to buy one to live in. When you already own a residential property but choose not to live in it because you want to live in London, you can't get free money from the taxpayer to help you get "on the ladder". You don't need a helping hand to buy a London home, as if you cash in your other assets (e.g. existing property) you will have a chunk of money towards a deposit and therefore you don't need to get a free £3k from the rest of us so that you can avoid selling your non-London place.

I appreciate you might not be "looking for a loophole" but what you want to do is not how it's supposed to work. Personally I co-own the place I live in, but if I want to strike out on my own I can't say "ah but i've never owned my own place so please give me free cash it would be very useful".