Lifetime ISA + Land with Planning Permission + Joint Build

Emony810

Many thanks, in advance, to anyone who can provide some guidance, support and assurance on the following.

My situation: I have never owned a house, property or land before. Recently, I was given some land and I have an application in for Planning Permission on this land. I wish to build a house that I intend to live in, and I have a Lifetime ISA opened in 2018. I have an Agreement in Principle for getting a mortgage, my Architect and Financial Advisor do not believe this will be enough to cover the cost to build completely. My first idea was to borrow money from family/friends alongside the Self-Build Mortgage, but I have spoken to a few Self-Build Mortgage providers who have made it clear that I cannot borrow from anyone else and take out a Self-Build Mortgage. My only option with a Self-Build Mortgage is for a partner to also take out a Self-Build Mortgage for the same build. Understandably, none of my family/friends want to/can do this.

My solution: With Planning Permission, enter into a contract with family/friends to build together. Preferably, my contributions will be last (i.e. when money from friends/family runs out). Once built, I will buy back the investment from friends/family with a Mortgage, as agreed in the contract. I will use the Lifetime ISA at this point.

My concern: On record, at the time that I take out the Mortgage, I will have 'previously owned' land with Planning Permission (the same land), and I might have a small share in the property.

Assurance: I have spoken verbally with my Financial Advisor, two Solicitors, HMRC ISA Helpline, and a Mortgage Broker, who all state that as long as the LISA T&Cs are met, and if the Lifetime ISA Provider is willing to release the funds, then yes, my solution is good. I have also spoken verbally with my Lifetime ISA Provider's 'Technical Team' who have stated that as long as the LISA T&Cs are met, they will release the funds.

The LISA T&Cs: (Source: gov.uk lifetime-isa)

1. You can withdraw LISA money to buy your first home - YES

2. The property costs £450k or less - YES

3. You buy the property at least 12 months after you open the LISA - YES

4. You use a conveyancer or solicitor to act for you in the purchase - YES

5. You're buying with a mortgage - YES

 

Additional T&Cs/Notes:

(Source: gov.uk conveyancers-first-time-residential-purchase-with-a-lifetime-isa guidance)

6. The withdrawal is no more than the purchase price of the property - YES

7. The withdrawal amount will only be released towards covering the purchase price of the property - YES

8. There are two reasons why a LISA Manager might prevent the withdrawal going ahead: either the LISA Manager believes the information provided by the Investor is untrue, or the withdrawal is within 12 months of opening the account - GOOD

(Source: gov.uk Model Investor Declaration)

9. The LISA funds withdrawn will be used towards buying my first residential property - YES

10. I am purchasing the property as a sole owner or as a joint owner with another individual who may already own the property - YES

I meet all of the T&Cs and I can honestly declare everything on the Model Investor Declaration Form, but I still have in the back of my mind this concern about the fact that I will own the Land that the Property is built on at the time I take out a mortgage: property owned by others, land owned by me.

Reality Check: Worst case scenario is that I can't use the LISA and therefore forfeit 25% of the total amount. Not a big problem, but we are talking a few thousands of pounds which is a lot of money that I would prefer to access.

Do I need to be concerned, or should I just be happy and smile that I meet all the T&Cs?

[Deleted User]

Emony810 said:

Many thanks, in advance, to anyone who can provide some guidance, support and assurance on the following.

My situation: I have never owned a house, property or land before. Recently, I was given some land and I have an application in for Planning Permission on this land. I wish to build a house that I intend to live in, and I have a Lifetime ISA opened in 2018. I have an Agreement in Principle for getting a mortgage, my Architect and Financial Advisor do not believe this will be enough to cover the cost to build completely. My first idea was to borrow money from family/friends alongside the Self-Build Mortgage, but I have spoken to a few Self-Build Mortgage providers who have made it clear that I cannot borrow from anyone else and take out a Self-Build Mortgage. My only option with a Self-Build Mortgage is for a partner to also take out a Self-Build Mortgage for the same build. Understandably, none of my family/friends want to/can do this.

My solution: With Planning Permission, enter into a contract with family/friends to build together. Preferably, my contributions will be last (i.e. when money from friends/family runs out). Once built, I will buy back the investment from friends/family with a Mortgage, as agreed in the contract. I will use the Lifetime ISA at this point.

My concern: On record, at the time that I take out the Mortgage, I will have 'previously owned' land with Planning Permission (the same land), and I might have a small share in the property.

Assurance: I have spoken verbally with my Financial Advisor, two Solicitors, HMRC ISA Helpline, and a Mortgage Broker, who all state that as long as the LISA T&Cs are met, and if the Lifetime ISA Provider is willing to release the funds, then yes, my solution is good. I have also spoken verbally with my Lifetime ISA Provider's 'Technical Team' who have stated that as long as the LISA T&Cs are met, they will release the funds.

The LISA T&Cs: (Source: gov.uk lifetime-isa)

1. You can withdraw LISA money to buy your first home - YES

2. The property costs £450k or less - YES

3. You buy the property at least 12 months after you open the LISA - YES

4. You use a conveyancer or solicitor to act for you in the purchase - YES

5. You're buying with a mortgage - YES

 

Additional T&Cs/Notes:

(Source: gov.uk conveyancers-first-time-residential-purchase-with-a-lifetime-isa guidance)

6. The withdrawal is no more than the purchase price of the property - YES

7. The withdrawal amount will only be released towards covering the purchase price of the property - YES

8. There are two reasons why a LISA Manager might prevent the withdrawal going ahead: either the LISA Manager believes the information provided by the Investor is untrue, or the withdrawal is within 12 months of opening the account - GOOD

(Source: gov.uk Model Investor Declaration)

9. The LISA funds withdrawn will be used towards buying my first residential property - YES

10. I am purchasing the property as a sole owner or as a joint owner with another individual who may already own the property - YES

I meet all of the T&Cs and I can honestly declare everything on the Model Investor Declaration Form, but I still have in the back of my mind this concern about the fact that I will own the Land that the Property is built on at the time I take out a mortgage: property owned by others, land owned by me.

Reality Check: Worst case scenario is that I can't use the LISA and therefore forfeit 25% of the total amount. Not a big problem, but we are talking a few thousands of pounds which is a lot of money that I would prefer to access.

Do I need to be concerned, or should I just be happy and smile that I meet all the T&Cs?

I'm not so sure you will meet the criteria.  There's a FTB declaration you need to sign when withdrawing the funds.
https://www.helptobuy.gov.uk/documents/2015/12/eligibility-of-ftbs.pdf/
2. I do not own, and never have owned any interest in land, whether in the United Kingdom or elsewhere, which:
(A) is: (i) in England or Wales: (a) freehold; (b) leasehold, where the lease was originally granted for a term certain exceeding 21 years; or (c) commonhold; or
(ii) in Scotland, registered or recorded, or would be capable of being registered or recorded, as a right of absolute ownership in the Land Register of Scotland or General Register of Sasines in Scotland, as applicable; or
(iii) in Northern Ireland: (a) freehold; or (b) leasehold, where the lease was originally granted for a term certain exceeding 21 years; or (iv) an equivalent interest in land to the interests in land listed in paragraphs (A)(i) to (iii) above under the laws of any jurisdiction outside the United Kingdom; and
(B) 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; and
(C) (i) which I acquired as a purchaser by way of sole or joint ownership; or (ii) which entitles me to possess or occupy that land. 

Emony810

Perfect response, thank you.