LISA rules on house completion

Mark-D

Hi, I have a LISA I am using to purchase my house. I paid in my 2018/19 allowance about 6 weeks ago but have been told by Skipton the bonus will not be paid into my account until the end of June at the earliest. However I am due to complete on 29 June, and Skipton have said if the bonus is not in the account at that date then if I withdraw the bonus when it is in the account in early July I will incur the 25% penalty. This seems unfair as I am being penalised only because of the delay in paying the bonus. Is their interpretation of the rules correct?

Paul_DNAP

Yes, they are correct, if you will have a 25% penalty applied whenever you withdraw from a LISA for any reason other than (1) to buy your first home (2) aged over 60 or (c) declared terminally ill
The bonus payment dates are clearly noted on the Skipton website as being calculated on "Your bonus is calculated on any payments you make into your account from the 6th of the month to the 5th of the following month inclusive." and the government bonus "will be paid into your account within 14 days of the 20th day of month two" and as such you were very optimistic scheduling completion on the 29th.

Alexland

Hi,

It was your choice or circumstances to set a completion date which may be in advance of the bonus payment date.

If you have exchanged contracts and are now tied to a completion date then (assuming the LISA is at least 12 months old since the initial deposit date) ask your solicitor to withdraw the account balance leaving the account open for the bonus to be added.

Then to avoid the penalty after the bonus is added ask AJ Bell to transfer the account into their S&S LISA and invest it in something like the Vanguard LifeStrategy 80 fund and it will hopefully grow (with some ups and downs along the way) and you can use it for your 60th birthday party.

Alex

eskbanker

Mark-D wrote: »

Hi, I have a LISA I am using to purchase my house. I paid in my 2018/19 allowance about 6 weeks ago but have been told by Skipton the bonus will not be paid into my account until the end of June at the earliest. However I am due to complete on 29 June, and Skipton have said if the bonus is not in the account at that date then if I withdraw the bonus when it is in the account in early July I will incur the 25% penalty. This seems unfair as I am being penalised only because of the delay in paying the bonus. Is their interpretation of the rules correct?

While there's nothing you can do now about not having spotted the finer points of the bonus payment scheduling (if you'd paid in by 5 May you'd have received the bonus by late May or early June), have you sorted out the various declarations needed to get the ball rolling with Skipton in time for completion on the 29th?

In particular, as per https://www.skipton.co.uk/mortgages/first-time-buyers/using-your-lifetime-isa:

You!!!8217;ll need to complete an Investor Declaration form to access your Lifetime ISA funds and the form needs handing to your conveyancer who will in turn complete a Conveyancer Declaration. Once we receive the correct information from your conveyancer, we will email you to confirm before transferring the money to your conveyancer within 30 days.

Mark-D

Unfortunately the Skipton timeline for bonus payments was only added in mid May, so the rules were unclear before then, and as I am buying a new build the 29th is the latest day the developers will accept for completion (they hold all the cards on when completion must take place), hence why I have the problem, but thanks for all your comments.

eskbanker

Mark-D wrote: »

Unfortunately the Skipton timeline for bonus payments was only added in mid May, so the rules were unclear before then

I take your point that Skipton's relatively recent website graphic illustrating bonus scheduling for 2018/19 has made things clearer, but this bonus scheduling isn't Skipton-specific, it applies to all LISA providers and has been in the scheme rules since launch last year (bonus claim periods are explained at clause 9B.24 in this document from early 2017 that's been regularly referred to on here).

Anyway, as above, that's water under the bridge now, but, looking forwards, have you ensured that Skipton will release the funds by next week, given their (up to) 30-day window for doing so?

masonic

Mark-D wrote: »

HI paid in my 2018/19 allowance about 6 weeks ago
...
This seems unfair as I am being penalised only because of the delay in paying the bonus

So that would be around 9th May. It's a shame you left it that long - that's the the origin of the delay.

Do you have insufficient funds to complete without including this years bonus money?

thenewguy

Bonus payments take up to 14 days from the 20th. Skipton may have them earlier than the end of June. Call them on 23rd or 24th.