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Lifetime ISA and Buying Off-Plan

edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
6 replies 681 views
Danny-rDanny-r Forumite
13 posts
edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
Wondered if anybody has any experience using a LISA and buying a new build off-plan. Unfortunately the person we deal with at the company is on A/L for 2 weeks so can't address it with them until then which is leading to a bit of worry.

We have our deposit saved up in our LISA, 10% (first time buyers). We've placed a reserve on a plot and began speaking to a conveyancer who sent us the paperwork to release the LISA funds.

It was at this stage we noted the time limits. The sale must be completed within 90 days, at which stage you can apply for a 60 day extension, and then a final 30 day extension.

The property build begins in November. The official date for contract exchange is 3rd of January although I've been told nothing really happens in that week as nobody is in the office so it'll likely be the 2nd week of January.

The stated expected build completion date is Q2 2020. That would fall within the 180 day deadline for the LISA, but of course delays often happen with building, especially with it being built over the winter.

Has anybody had any experience with this kind of situation. LISA's are pretty common so I'd assume I'm not the only one?

Replies

  • eskbankereskbanker Forumite
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    I can't speak from direct experience but wonder if your conveyancer can include some sort of clause that imposes a late completion charge/discount on the builder that equates to the 25% withdrawal penalty you'd have to pay if the LISA money couldn't be used within the 180 days?
  • Danny-rDanny-r Forumite
    13 posts
    I'm hoping it could be a lot more simple than that and either they agree to delay the deposit or they agree to return it temporarily.

    Everyone seems to have dealt with HTB ISA's but not LISA's, which amazes me because LISA's are such better value.
  • eskbankereskbanker Forumite
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    Danny-r wrote: »
    I'm hoping it could be a lot more simple than that and either they agree to delay the deposit or they agree to return it temporarily.
    Yes, agreed that either of those would work too - it just depends on what your conveyancer can negotiate with the builder.
    Danny-r wrote: »
    Everyone seems to have dealt with HTB ISA's but not LISA's, which amazes me because LISA's are such better value.
    It's likely to be a combination of factors, but primarily timing, in that it's been possible to buy with a HTB ISA since February 2016, but only since June 2018 for LISAs. Coupled with the relatively widespread embracing of HTB ISAs by the industry, versus a pitifully tiny number of LISAs launched to market (especially the cash variant that's more suited to first-time buyers), it's no real surprise that the latter won't have been used so often....
  • edited 12 February at 8:55PM
    busybee93busybee93 Forumite
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    MoneySaving Newbie
    edited 12 February at 8:55PM
    We're considering reserving a new build off plan but we have a good chunk of our deposit in a LISA. The problem we've noticed is around the time limits for completion. It is going to be a bit of a problem to complete 90 days max after exchange! Obviously we don't want to pay the LISA withdrawal fee and want to get the bonus. I'd be grateful if you could share your experience. Thanks!
  • eskbankereskbanker Forumite
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    busybee93 said:
    It is going to be a bit of a problem to complete 90 days max after exchange!
    As mentioned above, 90 days isn't actually the maximum, as it can be extended by 60 and then 30 more if needed, so the real max is 180 days.

    https://www.gov.uk/guidance/lifetime-isas-for-isa-managers#withdrawals-for-first-time-residential-purchase:
    When a property purchase is proceeding towards completion but is not expected to complete within 90 days of the funds being withdrawn from the LISA the investor’s conveyancer can ask the LISA manager for a 60 day extension followed by a further 30 day extension, if required.
  • busybee93busybee93 Forumite
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    MoneySaving Newbie
    Thank you eskbanker. Hopefully we will be able to complete within that timeframe.
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