Lifetime ISA rules questions?

Gordon_the_Moron

https://www.gov.uk/lifetime-isa

Hmmmm.... if you have 2 lifetime ISAs in different tax years (this is apparently allowed)

1. Can you use both accounts for the bonus when buying a property or do you have to transfer them together and use one?

2. If you can use both accounts, does the second one have to have been open a year or just the first one?

Alexland

You may wish to read the advanced LISA guidance for ISA Managers

https://www.gov.uk/guidance/lifetime-isas-for-isa-managers#withdrawals-for-first-time-residential-purchase

In particular they acknowledge that a property purchase can be supported by an investor with multiple LISAs but it's more work for your solicitors who may charge extra for drawing from the additional funding source.

the withdrawal (or in the case of an investor with more than one Lifetime ISA, the total withdrawals) is less than the purchase price of the residential property

But the 12 month rule is per LISA account:

The 12 month period applies to each Lifetime ISA that an individual opens.

Alex

Herbalus

With the scarcity of LISA providers and relatively short period of time LISAs have been available, it will be rare indeed for an individual to have more than 1 LISA (particularly for a house purchase, which should really be in cash due to the short-term requirement to withdraw).

I would ensure that your solicitors know very early on what the situation is as I'm sure it is not common.

Alexland

I am guessing the OP is tempted by the higher rates on the newer LISAs which do not yet allow transfers in.

Herbalus

The market really is a mess isn't it.

The few providers that do offer it not allowing transfers in makes a broken market even more fragmented.

Thrugelmir

Herbalus wrote: »

The market really is a mess isn't it.

The few providers that do offer it not allowing transfers in makes a broken market even more fragmented.

With the sums involved. There's insufficient margin for lenders to cover administrative costs. The 3 cash providers are all building societies. Who aren't going to invest significant sums either given their relative size in the mortgage lending markets.

aj23_2

Gordon_the_Moron wrote: »

https://www.gov.uk/lifetime-isa

Hmmmm.... if you have 2 lifetime ISAs in different tax years (this is apparently allowed)

1. Can you use both accounts for the bonus when buying a property or do you have to transfer them together and use one?

2. If you can use both accounts, does the second one have to have been open a year or just the first one?

Why would you even need or want to open another one with a different provider in a different tax year? You can still only put in £4k in one of them per tax year, not both. Seems a bit odd to me. Easier to to just fund one, then the interest compounds on a higher balance.

Gordon_the_Moron

In answer to the question of why I want to do it, I have about £15k in a LISA at the minute with Skipton (I opened a H2BISA the day they launched and funded it with the maximum possible and then transferred to LISA and maxed that out)

I want to transfer it out to either Nottingham BS or Newcastle BS. Neither will let me though.

Advantage of Newcastle - marginally better rate.
Advantage of Nottingham - I'm an existing customer of theirs with regular savers and live within 2 miles of a branch. I could make cash deposits without fannying around paying in another account and transferring.

I was considering opening one or other of these 2 in April 2019 for next tax year and hoping one of them at some point starts allowing transfers. I won't bother now, I hadn't thought of the fact the solicitors might charge more and that more than offsets any advantage.

aj23_2

Gordon_the_Moron wrote: »

In answer to the question of why I want to do it, I have about £15k in a LISA at the minute with Skipton (I opened a H2BISA the day they launched and funded it with the maximum possible and then transferred to LISA and maxed that out)

I want to transfer it out to either Nottingham BS or Newcastle BS. Neither will let me though.

Advantage of Newcastle - marginally better rate.
Advantage of Nottingham - I'm an existing customer of theirs with regular savers and live within 2 miles of a branch. I could make cash deposits without fannying around paying in another account and transferring.

I was considering opening one or other of these 2 in April 2019 for next tax year and hoping one of them at some point starts allowing transfers. I won't bother now, I hadn't thought of the fact the solicitors might charge more and that more than offsets any advantage.

I did the same as you and have £15,000 in mine, but I've never entertained opening another with a different provider.

If you've already made a £4,000 2018/19 contribution (you must have to be at £15,000 now) in the last 7 months, you can't subscribe any more money to any other provider in this tax year. You can only deposit into one per tax year.

If you decide to open with someone else after April 2019, you're compounding of interest will be lower than it would be if you had a higher balance in just one account, and if your new one cuts the rate (which is possible in these times) you'd lose money (as you'd get interest on a bigger gov bonus in just the one account you already have). 1% vs 1.1%, is marginal, I agree there. Not enough to make me switch or open a different one though. Not worth the time IMO. It's just making extra administration for yourself without actually gaining anything worthwhile. Then you'd have two to get a solicitor to administrate on your behalf. On my balance, I'd be looking at a competitors rate of at least 0.5% more than what I get with Skipton to entice me to switch, and Skipton have increased with both base rates anyway.

Alexland

Gordon_the_Moron wrote: »

I hadn't thought of the fact the solicitors might charge more and that more than offsets any advantage.

We haven't really seen much feedback from buyers on the solicitor fees for drawing on the LISA as an additional funding source but for a HTB ISA the additional charge was capped at £50+vat.

Alex

snowqueen555

aj23 wrote: »

Why would you even need or want to open another one with a different provider in a different tax year? You can still only put in £4k in one of them per tax year, not both. Seems a bit odd to me. Easier to to just fund one, then the interest compounds on a higher balance.

Well I am with HL and they offer in interest. I was originally going to invest it, but I don't want to now.