Received Help-To-Buy bonus when we shouldn't have.

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My partner and I bought a house near Manchester last year. This was a new build home, which cost £275000, however as we used help-to-buy, it cost us £215000. We completed in April, and moved in during June. We also both used a help-to-buy ISA to help save for our deposit, and each received £1200 bonus from the government as a result of this. However, we've just seen an article which states that if the total price of the home you are buying is over £250000 (or £450000 in London - which does not apply to us), that you are not eligible for the bonus on your help-to-buy ISA.

The issue is that whilst we are apparently not eligible for this bonus, we both received it. I understand that we should have been aware of this from the fine print, but clearly we are not the only ones who missed it - our solicitor didn't mention anything, and neither did Help-To-Buy. What position does this leave us in - are they likely to come back to us in the future and try to reclaim the £2400, and do we have any grounds for refusing to pay it back as it was not just our mistake? Do we need to seek legal advice, or are there other cases of this happening? Any advice on how to proceed would be much appreciated.

Alexland

Yes the cap applies to the full sale price of the property rather than just the percentage you end up buying. So it sounds like you have received the bonuses incorrectly.

I have never heard of this happening before but I certainly think the government has every right to claim back the bonus if they discover the error. In addition if you made a false declaration in order to collect the bonus then it is possible you could face a further penalty.

Personally I would contact my solicitor to discuss and return the bonus.

Alex.

eskbanker

I'd argue that the solicitor should also accept at least some of the liability, given that they would have submitted bonus request documentation which was either falsified or incompatible with the scheme rules - by their nature first time buyers will be inexperienced in such matters and so it isn't unreasonable for them to rely on the professional skill of those who conduct such transactions regularly.

The conveyancer's responsibilities defined in clause 7.5 of the HTB ISA scheme rules explicitly include validating that the price is within the limit:

an Eligible Conveyancer shall not make a claim for a Bonus until [...] the Eligible Conveyancer is satisfied that [...] the Purchase Price for the Eligible Interest in Land is [...] outside London, not more than £250,000.

OP - do you have a copy of the first time buyer declaration that you'd have signed, as per schedule 5 on page 64 of those rules, which prominently includes the property purchase price?

margaretx9

I would wait for the Government to contact you personally and plead ignorance if they do - your solicitor made the error in applying and the government made the error in paying out. Just set aside the £2400 just in case.

If you had bought a house in London you would have been eligible for the bonus. Perhaps someone might take the Government to the Supreme Court/European court of human rights - for discrimination against non Londoners? The limit for the lifetime isa is the same - so why is the HTB isa different? And the first time buyer stamp duty relief is different again at £500k.

Shame the Government can't streamline its schemes.

Alexland

margaretx9 wrote: »

I would wait for the Government to contact you personally and plead ignorance if they do - your solicitor made the error in applying and the government made the error in paying out. Just set aside the £2400 just in case.

The OP might need to set aside more than £2400 if they made a false declaration and get caught.

Rich2808

Alexland wrote: »

The OP might need to set aside more than £2400 if they made a false declaration and get caught.

It's the conveyancers job to apply for the bonus, advise the client they are eligible and receive the bonus.

The OP was eligible to hold a help to buy ISA - that is where you declare first time buyer status. But the solicitor applies for the bonus and advise on that - which is why they get £50 for doing so. If there was a false declaration - the solicitor made it not the OP.

https://www.helptobuy.gov.uk/help-to-buy-isa/faq/#when-is-bonus-paid

The solicitor made the false declaration and or HMRC didn't pick it up. That is where the false declaration and application has been made.

Alexland

No the buyer also completers a First Time Buyer Declaration at the point of claiming the bonus which includes the property address which the conveyancer used to claim the bonus. The declaration even includes a specific statements to say the buyer has operated the HTB ISA under the terms and conditions and understands that they may incur personal liability.

https://www.helptobuy.gov.uk/documents/2015/12/eligibility-of-ftbs.pdf

However I agree the buyer may be able to try and claim any penalty back from the conveyencer.

Alex

Rich2808

Alexland wrote: »

No the buyer also completers a First Time Buyer Declaration at the point of claiming the bonus which includes the property address which the conveyancer used to claim the bonus. The declaration even includes a specific statements to say the buyer has operated the HTB ISA under the terms and conditions and understands that they may incur personal liability.

https://www.helptobuy.gov.uk/documents/2015/12/eligibility-of-ftbs.pdf

However I agree the buyer may be able to try and claim any penalty back from the conveyencer.

Alex

And nowhere on that form does it say £250,000 or £450,000 - which you might think would be useful to have included.

It also asks if the property is in London - but doesn't define that. About one third of 'London' homes don't have a London address - they have Essex, Kent or Surrey or Middx addresses - but are in the 33 boroughs.

It would be very easy to feign ignorance and said your solicitor advised you you were eligible - the fact this solicitor applied and secured the bonus when the property was over the £250k limit suggests there is a flaw in the audit process.

Alexland

I agree the declaration could get more helpful in reminding the buyer about the key HTB ISA conditions but doubt the government would agree that Manchester might be mistaken for a London borough.

Anyway the OP has the choice of owning up or maybe getting caught when the government process the form.

Alex