Just found out we can't use our Help to Buy ISAs for house purchase. Should we switch over to LISAs?

p00hsticks

Sandwich said:

knightstyle said:

Negotiate with the seller buy for £250k and give £10k or less for fixtures?

That's an interesting idea. Would that not be considered fraud though? Because you're manipulating the sale price to your advantage (not saying it's definitely fraud, but I don't know). 

Thirty or forty years ago I seem to recall it used to be quite a common ploy to avoid / reduce your SDLT bill, but HMRC got wise to it and I think would look at such transactions very carefully now, especially when on a SDLT rate boundary as this would be. You'd need to be able to demonstrate that the 'fixtures' you were buying really were worth £10k. Plus, of course, your mortgage lender would then only be prepared to lend on a valuation of £250,000, so your LTV would go up accordingly and might end up costing you more.

joe90mitch

seradane said:

Exodi said:

Sandwich said:

That's unfortunate. I think the cap is a bit low. It's hard to get a nice family home for under £250k in lots of parts of the country, not just London. 

Well the cap is £450k in London but I know what you mean - there is massive disparity between what 250k can buy up and down the country and in Kent (where I live), there weren't many 3 bed houses for sub 250k. I'd imagine up north you have a much larger selection of properties you can redeem the ISA against.

Again, first time buyers aren't supposed to be the ones purchasing three bed houses, so the ISA limit reflects that...

What's your point though - reality is lots of first time buyers nowadays can't even afford to buy anything until they're approaching thirty, in relationships and potentially thinking about families. Certainly the case for me and most of my friends.

Doesn't really help the OP but the LISA seems a better fit for first time buyers nowadays.

grumiofoundation

seradane said:

Exodi said:

Sandwich said:

That's unfortunate. I think the cap is a bit low. It's hard to get a nice family home for under £250k in lots of parts of the country, not just London. 

Well the cap is £450k in London but I know what you mean - there is massive disparity between what 250k can buy up and down the country and in Kent (where I live), there weren't many 3 bed houses for sub 250k. I'd imagine up north you have a much larger selection of properties you can redeem the ISA against.

Again, first time buyers aren't supposed to be the ones purchasing three bed houses, so the ISA limit reflects that...

Not sure exactly what you mean by ‘supposed to’? 

But anyway since the lifetime ISA limit being set at 450k everywhere clearly the government doesn’t agree with you.

owenjt

knightstyle said:

Negotiate with the seller buy for £250k and give £10k or less for fixtures?

I think fixtures have to be included in the price. Maybe for fittings, e.g. free-standing appliances, but they would have to genuinely be worth £10k.

greensalad

PlumLuck said:

I think the issue is that they're not expecting you to buy a 'nice, family home' as a FTB. But as FTBs get older, they'll be looking for houses that were traditionally second or third purchases as their first.

This is exactly where me and my partner are at. After spending 5 years renting a "starter home" because we could in no way afford to buy, our "first home" is actually our "family home" in our 30s... the place we want space to grow into and have space for a family. I find it odd that FTBs are still expected to be purchasing small 2 bed terraces and the like.

Exodi

seradane said:

Exodi said:

Sandwich said:

That's unfortunate. I think the cap is a bit low. It's hard to get a nice family home for under £250k in lots of parts of the country, not just London. 

Well the cap is £450k in London but I know what you mean - there is massive disparity between what 250k can buy up and down the country and in Kent (where I live), there weren't many 3 bed houses for sub 250k. I'd imagine up north you have a much larger selection of properties you can redeem the ISA against.

Again, first time buyers aren't supposed to be the ones purchasing three bed houses, so the ISA limit reflects that...

I think you've missed the point and are replying on emotion rather than fact - I'm sorry to break it to you, but you can still buy 3+ bed houses for £250k, even now. In fact a quick rightmove search shows me an 8 bed detached house I can buy for under 250k up north www.rightmove.co.uk/properties/87520012

This is exactly the point I was making: the scheme doesn't limit the type of property you can buy (though you may wish it did), only the value, which leads to great disparity up and down the country about what you can redeem the HTB bonus against. Add into the mix that houses were on average 30% cheaper when the scheme came out to now...

grumiofoundation said:

seradane said:
Again, first time buyers aren't supposed to be the ones purchasing three bed houses, so the ISA limit reflects that...

Not sure exactly what you mean by ‘supposed to’? 

But anyway since the lifetime ISA limit being set at 450k everywhere clearly the government doesn’t agree with you.

joe90mitch said:

seradane said:

Again, first time buyers aren't supposed to be the ones purchasing three bed houses, so the ISA limit reflects that...

What's your point though - reality is lots of first time buyers nowadays can't even afford to buy anything until they're approaching thirty, in relationships and potentially thinking about families. Certainly the case for me and most of my friends.

Doesn't really help the OP but the LISA seems a better fit for first time buyers nowadays.

  I wouldn't pay much attention to seradane.

Chandler85

I'm in my 30s now and on my 3rd property, because I bought a terrace, then a bigger house then a bigger one again.

There was no such thing as HTB, LISA etc back then either, no stamp duty on my first house though.  My first house, in the last 13 years was recently on the market and had gone up to about £160k and we aren't in a cheap location, I could have gone to a cheaper one and bought a cheaper house.

I have friends now, my age who are buying their first homes, and they want a 3 or 4 bed detached property, with a garden and driveway etc.  Then are complaining they can't get it, don't want to pay as much as they sell for etc.  Well that's because they want there first house to be the forever house.  People with no kids wants houses with 3 extra bedrooms for when they start a family...

Kids can share rooms until say 10 years old (assuming it is decent size), so most families can live in a terrace for 5 years easily and then move on to a bigger property.  They is seemingly an unwillingness to let children share rooms any more, or to not be in the perfect location.  There has to be a compromise somewhere.

Gavin83

I agree these various schemes should have been adjusted for increasing house prices (it essentially gets worse as time goes on) but we are where we are.

I also fail to understand why people are still using the HTB scheme and didn’t switch to the LISA as soon as it came out. From what I can tell it’s a better scheme in just about every conceivable way.

In the OPs case I’d be switching to the LISA and putting my purchase off for a year. Probably not what they want to hear but it’s the best solution. Frankly your purchasing issues aren’t the vendors problem and I expect most would prefer to sell to someone else than drop the price so you can get your bonus.

I also hope you’ve got a fairly significant amount of money for the deposit on top of the HTB as well as you can’t use the HTB for the exchange deposit which is normally 10%. So unless you’ve got the HTB + another £25k kicking around you might struggle….

seradane

Exodi said:

seradane said:

Exodi said:

Sandwich said:

That's unfortunate. I think the cap is a bit low. It's hard to get a nice family home for under £250k in lots of parts of the country, not just London. 

Well the cap is £450k in London but I know what you mean - there is massive disparity between what 250k can buy up and down the country and in Kent (where I live), there weren't many 3 bed houses for sub 250k. I'd imagine up north you have a much larger selection of properties you can redeem the ISA against.

Again, first time buyers aren't supposed to be the ones purchasing three bed houses, so the ISA limit reflects that...

I think you've missed the point and are replying on emotion rather than fact - I'm sorry to break it to you, but you can still buy 3+ bed houses for £250k, even now. In fact a quick rightmove search shows me an 8 bed detached house I can buy for under 250k up north www.rightmove.co.uk/properties/87520012

This is exactly the point I was making: the scheme doesn't limit the type of property you can buy (though you may wish it did), only the value, which leads to great disparity up and down the country about what you can redeem the HTB bonus against. Add into the mix that houses were on average 30% cheaper when the scheme came out to now...

I'm not sure why my single line comment is being interpreted by you as an emotional response based on what I wish was the case?

You were complaining that a grant to help first home buyers would not stretch as far as a 3 bedroom family house in the South East, the most expensive part of the country. Is it really so hard to fathom that the HTB programs were deliberately not designed with someone in that position in mind?

If I was to sit here and complain that I couldn't get free stamp duty on my purchase of a £800k 3-bed family house in zone 1 London, because it just so happens to be that I've not purchased a home before, you'd have absolutely zero sympathy for me. The point that, well, 3-bed houses for less than £800k don't exist in Zone 1 London isn't really relevant, is it? Someone in that position is clearly fortunate enough that they really don't need any help from the government, and there are a vast amount of other options they could look at instead, if paying stamp duty was what made that purchase unaffordable for them.

It just seems that as soon as there's a benefit or an incentive being offered, designed to assist those who need it the most, there's always someone who's angry because they missed the cutoff. 

Would you rather that nobody got any help at all?

Gavin83

Honestly in many ways I think the Lifetime ISA is too generous. We've just bought our first house, a 4 bed detached house in the South East for just under the Lifetime ISA purchase limit. Both me and my wife are reasonably high earners (well into the 40% tax bracket) and a lot of people would suggest we didn't need the help and I'd struggle to argue against that. I suspect the scheme wasn't designed for people like us but none the less we were still entitled to it. Even without the scheme we wouldn't have struggled to buy.

HTB obviously isn't as generous but as people are entitled to switch to the LISA it's somewhat irrelevant. What I struggle to understand is why everyone didn't switch when they had the chance. Complacency maybe?