LISA and house hacking

jjjgoulding

Please help, are any either of these scenarios feasible when using a LISA??????

Scenario 1: Use a LISA for a mortgage to purchase land and build two houses (assuming the total is less than the £450,000 limit) live in one of the houses as your first home and either: (1: preferable option) rent out the second home, (2) sell the second home, (3) List the second home on Airbnb. In order to cover the cost of the mortgage and potentially earn an income.

Scenario 2: Use a LISA for a mortgage to purchase land and build a single house to live in as your first home (less than £450,000 for land and single house) then either using another mortgage or non-LISA savings, build a second home on the same land and rent out this property in order to cover the mortgage(s).

masonic

You can't use a LISA to buy undeveloped land (edit: at least not without paying the withdrawal penalty). You can't get a residential mortgage secured on undeveloped land either.

However, I can't see any problem with option 3: Buy a house with a very large garden using your LISA, apply for planning permission to build another house in your garden, if granted build your BTL home.

jjjgoulding

so you're saying the LISA cant be used for a self build? (forgetting about a second house)

thank you for the response :-)

Alexland

https://lifetimeisa.campaign.gov.uk

You can use the Lifetime ISA to buy land for a self-build property as long as the purchase meets all the other criteria for property purchase through the scheme.

I don't see why you couldn't build multiple properties provided you intend to initially live on the land as your primary residence. To play it safe maybe build one first then add the second in the garden later.

You might want to check your residential mortgage would allow you to split the land later (provided the LTV was still acceptable) as some lenders don't allow this.

Alex

masonic

From the primary legislation (https://www.legislation.gov.uk/uksi/2017/466/made):

“residential property” means a legal interest in land which comprises a building that is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use

(9) The account investor must— (a) on completion of the purchase occupy the land as their only or main residence; or (b) in consequence of the land comprising a residential property in the process of being constructed or adapted for use as a dwelling, on completion of the purchase must intend it to be their only or main residence and must occupy it as such on its becoming suitable for such use; or (c) in consequence of the account investor being an individual described in regulation 10A(2)(f)(i) or (ii), be unable to so occupy the land but must intend to do so in the future.

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So there is no issue with using a LISA for self build. However, there is an issue with using a LISA to acquire land that will subsequently be used for self build. According to the legislation, the land must contain at least a part-completed building at the point of acquisition.