LISA Charge: Exchanged, but not completed

QuiveringCoward

Good morning everyone, I could use a bit of help with this query

I'm in the process of buying my first property (by myself) - a 2 bed flat. I'm using Skipton building society for my LISA and the HTB equity loan scheme

Essentially, the whole purchase of buying the flat has been excruciating and has dragged out for a very long period of time. The estate agents, Connells, pushed me to exchange back in February (which I did) with a view to completing in March. That never happened and the developers (MCR) set themselves a new deadline of 31st May as that's when the HTB 2011-21 scheme ended. It also happened to be when my mortgage offer expired.

Long story short, the developers missed their "estimated" completion deadline of 31st May and my mortgage and HTB expired, but I had exchanged on the property. I have renewed my HTB on the 21-23 scheme, but after 2 months of battling Santander to renew my mortgage they declined my mortgage offer. I am now applying via Barclaya. I have also re-exchanged on the property around 1-2 months ago and this is where things get dicey

I received an email from Skipton last week stating my conveyancer's most recent request for an extension of holding my deposit funds was declined; and that my funds need to be returned in 10 working days or I will be charged 25%. Obviously I can't return them as my solicitor has used them to re-exchange. I've spoken to Skipton who have said they can't extend again and that I need to call the HMRC ISA Savings helpline on 0300 200 3300. The trouble is, the HMRC personnel had no idea how to help me. Would anyone have a better number I can call HMRC on?

eskbanker

It is correct that funds withdrawn from a LISA for a property purchase must be used within 180 days or returned, so there isn't anything Skipton or HMRC can do here and you need to negotiate something with your conveyancer.  Read all of this, and in particular the section on purchase failure:

https://www.gov.uk/guidance/lifetime-isa-withdrawals-for-a-first-time-residential-purchase

QuiveringCoward

Yes I understand the guidance. For anyone unfortunate enough to be in a similar situation you yourself need to write a signed appeal letter to HM Revenue & Customs explaining your circumstances and requesting an extension

I am curious though. This situation feels like either the bill should sit with the developers for taking so long to get the building fit and ready when I had been ready to complete earlier this year; or my solicitors for not having spotted that this eventuality could occur?

masonic

The funds should have been returned to the LISA temporarily when the initial exchange was aborted, then withdrawn again when you re-exchanged.

I'd hope you'd be able to work something out with Connells and MCR. If it wasn't for the protracted delay and lack of understanding of the LISA rules you wouldn't be in this mess. Now the whole transaction is under threat and presumably they wouldn't want you to be unable to complete.

Maybe you need a better number for a solicitor.