Nil Deposit Exchange - Lifetime ISA

ScottC95

Hello, first time poster here -

I’m currently in the process of buying a new build with Taylor Wimpey, we’ve reserved the plot (for £500) a few weeks ago and we have paid half of our options payment up front as required but the house was at a very early stage so isn’t due to be completed until Nov/Dec.

Going forward I’ve just been advised by my solicitor (using the one recommended by taylor Wimpey) that the Lifetime ISA requires you to complete within 90 days of you withdrawing funds which would not be possible due to the long and ambiguous completion date and TW wanting to exchange within 28 days. They advised a Nil Deposit Exchange but Taylor Wimpey are adamant that they won’t do this. If I give them the LISA deposit, when the 90 days pass without completion I’ll have to pay back the 25% loss to the LISA. Am I stuck with taking the hit of the LISA loss or losing the property altogether?

Sorry for such a long post but I feel really stuck between a rock and hard place!

Thanks for any help or advice in advance.

Viki2410

We were in a reasonably similar situation to you. We reserved our Persimmon house in September 2018, it was due to be complete June 2019 (still is)

We paid our £500 reservation fee and because we were using Help To Buy, we told them it wasn't possible to exchange within 28 days. We explained at the same time that our deposit was help in a Lifetime ISA which they said was not an issue.

We had a conversation with the Area Sales Manager and explained about our LISA and came up with an agreement that we would exchange based on our £500 reservation fee and the fact that we paid our solicitors for the searches and their work. This showed them that we were a serious buyer and the only reason we could not provide the deposit there and then was because of the 90 day limit.

Why don't you try and speak to someone and explain your situation fully. Explain about your LISA and the fact you have paid your reservation fee and you've paid for part of your extras which show's you are committed. You are just bound by the 90 limit of funds on your LISA. We had to provide proof of our deposit which they were happy with as it showed we had the funds ready.

The only options I know of if they won't go for that would be to walk away and lose (part of) your reservation fee and probably the money you have paid for your extras, which is not ideal.

Hope you get sorted!

diggingdude

Hi all, who are you using a lisa with. Skipton for example isn't technically a 90 day limit. If you read the conveyancer declaration form, you have 90 days, the solicitor can then request an additional 60 days and then a final 30 days before the money has to be returned to avoid a 25% penalty. So that is 6 months in total with just a bit of work from solicitor.

cjv

I recently had a problem with the administration of my LISA funds, after I had exchanged and used them to pay my deposit (change of plot I am buying). I had to temporarily replace the funds with my other savings, so they could be sent back to Skipton and a new declaration submitted with the new address so I could avoid the 25% penalty.

As stated above you actually have around 6 months to use the funds before you need to return them to Skipton.

If you reach this deadline, you can replace the LISA funds used for deposit with other savings (send to your solicitor). Have your solicitor send them back to Skipton reporting as a "failed purchase" and make a new declaration to withdraw them again. This will reset the clock and your solicitor can just report that the funds were used for the previous deposit, to avoid penalty.

Here is an image of my Skipton account showing how fast you can actually get the funds back if you need to, after reporting a failed purchase. You just need to ring them and explain you need the funds back asap.

https://imgur.com/a/4tZMUg5