Advice on using a LISA to purchase house + fixtures and fittings

SDLT_Geek

This suggests that it is moveable items for which you can agree a price separate from the price of the property.
https://www.google.com/amp/s/amp.theguardian.com/money/2019/nov/18/can-we-separate-out-fixtures-and-fittings-with-a-help-to-buy-isa
Doors, bathroom suite, boiler / heating system are part of the property. 

owenjt

SDLT_Geek said:

This suggests that it is moveable items for which you can agree a price separate from the price of the property.
https://www.google.com/amp/s/amp.theguardian.com/money/2019/nov/18/can-we-separate-out-fixtures-and-fittings-with-a-help-to-buy-isa
Doors, bathroom suite, boiler / heating system are part of the property. 

It says the 'purchase price includes fixtures and fittings', but the Help to Buy ISA 'purchase price' does exclude 'any consideration attributed to the purchase of any fixtures and/or fittings'. Confusing.

SDLT_Geek

Below is the definition of “purchase price” from the definitions section of the “conveyancer guidance” here https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/691773/conveyancer__1___5_.pdf

(a) in connection with the acquisition of any legal interest in land in circumstances other than those described in paragraph (b), (c) or (d), 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; or

(b) in connection with the acquisition of any legal interest in land under the terms of a regulated home purchase plan, the value of the consideration required to be paid, and which is paid, to the original seller for the legal interest in that land; or

(c) in connection with the acquisition of a legal interest in land by an individual who as a result of the acquisition becomes a joint owner of the land with another individual who previously owned the land, the market value of the whole of the land as determined at the time of the acquisition; or

(d) in connection with the acquisition of a leasehold legal interest in land under a shared ownership arrangement—

(i) the value determined in accordance with paragraph (a), or

(ii) the value of the premium 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, divided by the fraction representing the share of the property to be acquired on completion by the purchaser in return for the premium (howsoever described in the sale and purchase agreement or the lease).

SDLT_Geek

It is clear from this definition that items which are “part of the property” count to the property price.  A fair apportionment could be made to carpets, curtains and items of furniture which are left.

It would be wrong to apportion, as part of the contents price, figures for parts of the building such as doors or the heating system.

owenjt

SDLT_Geek said:

It is clear from this definition that items which are “part of the property” count to the property price.  A fair apportionment could be made to carpets, curtains and items of furniture which are left.

It would be wrong to apportion, as part of the contents price, figures for parts of the building such as doors or the heating system.

Thanks very much. Still confused as it says that the 'purchase price' does not include any consideration attributed to the purchase of any fixtures and/or fittings. I'm going to try and speak to a conveyancer asap and get clarification.

Thrugelmir

Fittings will be items not physically attached to the property. For which you come to a separate arrangement with the vendor to purchase. Though these items will form part of the consideration paid on completion. Might be a log cabin sauna or an expensive cooking range. 

grumiofoundation

owenjt said:

My wife and I are considering putting an offer in on a house we saw yesterday, on for offers over £450k. We both have Lifetime ISA's and would like to use these (so max purchase price must be £450k).

We'd be happy to pay more than £450k and are trying to work out if/how we can use our LISAs. The government technical guidance states that "The £450,000 maximum purchase price is worked out as the value to be paid under the sale and purchase agreement for the acquisition of interest in the land and doesn’t include the purchase of fixtures or fittings".

If it doesn’t include the purchase of fixtures or fittings, could we, for example, offer £470k and state the £20k is for fixtures and fittings and therefore use our LISAs? How do you determine what the fixtures and fittings are worth - assume we'd have to offer a reasonable price and not over inflate just to increase our overall offer?

As poster suggested above starting point for me would be to offer 450k (obviously could also start lower) and explain to EA why this is your 'hard' limit. 

[Deleted User]

owenjt said:

SpiderLegs said:

Not sure what you are asking. 

If you buy a property over 450k you don’t get the bonus.
if you buy at £450k and pay 1k, 2k or 20k for fixtures and fittings then you do get the bonus.

I'm asking how a Lifetime ISA works if the £450k maximum purchase price doesn’t include the purchase of fixtures or fittings.

It seems to me that you are trying to tell something less than the truth, the whole truth, nothing but the truth about the purchase price of the property in order to benefit from financial incentives that you would not be entitled to if the situation was declared accurately... Right?

Wrong.

So what are these "fixtures and fittings" that you will be paying £20k for on top of the £450k purchase price of the house itself?

Kitchen, appliances, carpets, doors, bathroom suite, boiler/heating system, tables, curtains/blinds, wardrobes, beds etc. The £20k was just an example but there's plenty of things you can call 'fixtures and fittings' which could add up.

Your list of fixtures and fittings really did make me laugh out loud. The kitchen comes with the property as does the bathroom suite. If you had neither a functioning kitchen or bathroom the property would be unmortgageable. Extra for the boiler and heating system which I assume is fully integrated into the property...🤣🤣🤣

This is very reminiscent of when people were trying to keep the purchase price below £250k under the old SDLT tax regime. HMRC cottoned on to that and they’ll see right through this too. 

AdrianC

owenjt said:

It seems to me that you are trying to tell something less than the truth, the whole truth, nothing but the truth about the purchase price of the property in order to benefit from financial incentives that you would not be entitled to if the situation was declared accurately... Right?

Wrong.

Sure about that?

So the house itself really is purchaseable for £450k, just without the genuinely £20k-worth of normally-excluded moveable contents?

So what are these "fixtures and fittings" that you will be paying £20k for on top of the £450k purchase price of the house itself?

Kitchen, appliances, carpets, doors, bathroom suite, boiler/heating system, tables, curtains/blinds, wardrobes, beds etc.  

So what is the genuine market value of that second-hand bed, table, free-standing wardrobes, free-standing appliances? The things that the vendor would normally put on the removal wagon without a second thought.

What's the genuine value of those second-hand curtains and carpets?
They would normally be left anyway, unless explicitly excluded on the property information form. To make an allowance for them would be unusual in the extreme.

Kitchen, bathroom, built-in wardrobes, integrated appliances, heating - they would all be included normally, and the house would likely not be mortgageable without many of them.

The £20k was just an example

If you are genuinely purchasing their used furniture, on top of the actual house purchase itself, then there is a consideration allowable for it - but at a fair market value for what is being purchased.

Unless the furniture is exceptionally valuable antiques, £20k is simply ridiculous.

Your mortgage lender would exclude that amount from their calculations as to LtV, because they are only lending against the house itself, not your second-hand furniture.

but there's plenty of things you can call 'fixtures and fittings' which could add up.

I think you just proved my point about the accuracy of your declaration...

I'm not sure how gullible you think everybody involved in the administration of SDLT, mortgage lending, and LISA incentives is... but the simple answer is "nowhere near as much as you seem to think".

letsbetfair

grumiofoundation said:

owenjt said:

My wife and I are considering putting an offer in on a house we saw yesterday, on for offers over £450k. We both have Lifetime ISA's and would like to use these (so max purchase price must be £450k).

We'd be happy to pay more than £450k and are trying to work out if/how we can use our LISAs. The government technical guidance states that "The £450,000 maximum purchase price is worked out as the value to be paid under the sale and purchase agreement for the acquisition of interest in the land and doesn’t include the purchase of fixtures or fittings".

If it doesn’t include the purchase of fixtures or fittings, could we, for example, offer £470k and state the £20k is for fixtures and fittings and therefore use our LISAs? How do you determine what the fixtures and fittings are worth - assume we'd have to offer a reasonable price and not over inflate just to increase our overall offer?

As poster suggested above starting point for me would be to offer 450k (obviously could also start lower) and explain to EA why this is your 'hard' limit. 

I'd do this too. Before working out I'd there's a way to use your LISA for a higher purchase price you need to know if you can get it for less!