Concessionary purchase + help to buy bonus

mashby18

Hi, wondering if anyone can help or has had experience of a similar situation. My partner and I are looking to buy my parents second home. My parents are willing to sell for £250k althought it is worth around £275k as it is (estate agent has valued). Our broker gave us an option of agreeing the sale price at 250 but agreeing the value at 275, therefore 25k acting as a gift and going towards the deposit. My partner and I both have help to buy ISA's but the broker said this option would not allow us to use the help to buy bonus money. I'm wondering why this is, as most information on the web refers to help to buy eligibility being based on the purchase price of the house (up to £250k) rather than the value of the house. We have enough savings to buy the house at 250 but want to be left with some money to do work on the house and therefore using the 25k gift towards the deposit seems like a good option so we are only putting a limited amount of our savings into the deposit. The broker seemed to think we could buy the house at the agreed sale price of 250 and get the help to buy bonus, but I'm confused about who decides the "value"? ....and there are questions about capital gains also but that's for my parents to look into! lol... If anyone has experience of a similar situation I'd be very gratefuly for some views and advice. Cheers.

eskbanker

mashby18 said:

Our broker gave us an option of agreeing the sale price at 250 but agreeing the value at 275, therefore 25k acting as a gift and going towards the deposit. My partner and I both have help to buy ISA's but the broker said this option would not allow us to use the help to buy bonus money.

mashby18 said:

The broker seemed to think we could buy the house at the agreed sale price of 250 and get the help to buy bonus

These two options seem contradictory to me, as the HTB ISA rules (7.5 (A) (ii)) are clear that it's the purchase price that matters when assessing eligibility for the bonus, rather than value (although the latter is relevant for mortgage purposes):

(d) the Purchase Price for the Eligible Interest in Land is: (1) if the Eligible Interest in Land is situated in London, not more than £450,000; or (2) if the Eligible Interest in Land is situated outside London, not more than £250,000. 

“Purchase Price” means: (a) in connection with the acquisition of any interest in land in circumstances other than those described in paragraph (b), (c) or (d) below, the value of the consideration required to be paid, and which is paid, by the purchaser under the sale and purchase agreement entered into in connection with the acquisition of that interest in land (excluding, for the avoidance of doubt, any consideration attributed to the purchase of any fixtures and/or fittings)

So, regardless of value, a purchase of £250K is eligible (assuming the other criteria are met) but hopefully your broker can explain more clearly what they meant by the options being presented.