Help to Buy ISA with Right to Buy scheme

locknova

New to the forums here and hoping someone may be able to shed some light on a question I've been struggling to find the answer to. Apologies and thanks in advance as I know it'll be a lengthy read!

For context, I'm currently living in a 2 bed semi-detached council property in the South East of England with my parents. We've been living here a number of years which will mean the maximum discount will apply when we ask to buy through the Right to Buy scheme. This discount equates to just shy of £90k (important later).

I'm currently in the process of getting a valuation from the council but my neighbour (other side of my semi detached) took out an equity loan over a year ago and at the time his property was valued at £290k. Both our properties are effectively the same floor plan and condition wise, so I'm using the £290k as a semi accurate guide price for my property. Market prices in my area haven't drastically changed even with recent market conditions.

I opened up a Help to Buy ISA (H2B) years back and have amassed a decent chunk of money in there. The H2B has a condition that if you're buying a house outside London then your "purchase price" needs to be £250k or below. If you meet these then you qualify for the 25% government bonus top up when using it to buy your first home.

Admittedly I didn't think at the time the £250k would apply to my property and due to also opening a Lifetime ISA (LISA), I ended up with the £450k limit in my head and basically focused on saving into the H2B while drip feeding very small amounts into my LISA as an additional retirement fund. 

This now brings me to my conundrum. On the gov.uk page for H2B it specifically states that the home must have a "purchase price" of up to £250k. It probably sounds daft, but I'm struggling to find out the exact definition of this "purchase price" term. 

On the face of it you'd assume it's just the market value of the property. However I'm trying to find out whether I can argue that the purchase price for me would be the market valuation of ~£290k less the council discount of ~£90k, would put my purchase price at below ~£250k. If this is the case then I can use my H2B to qualify for the 25% bonus. This is the crux of the question.

I've asked a mortgage advisor this question at NatWest (didn't do a AiP) and he unfortunately didn't know the answer. I've asked Barclays on the phone and they were also unsure. I've got an appointment with Barclays next month to go through my AiP.

I think not all hope is lost. If I find out my argument above wouldn't be valid, I'm fine with that as rules is rules after all. I've made a backup plan to transfer in the majority of my H2B savings into my LISA by using the tax cut off dates in April as that lets you put on £4k each tax year. But if so then I need to really get my skates on and find out whether the H2B is viable option. 

Given I couldn't find much on this online, I appreciate it's likely an absurdly niche question, but if anyone does know if purchase price can be argued that way, or any advice at all, that would be hugely appreciated.

Norman_Castle

https://www.ownyourhome.gov.uk/scheme/right-to-buy/contact-an-agent/

locknova

Thanks Norman. 

I forgot to mention in the original post but I've actually been in touch with them before. 

Surprisingly they said they had no idea on whether I could use a H2B or LISA with the Right to Buy and that I would have to ask "someone else". 

Norman_Castle

0300 555 0333 from here, https://www.google.com/search?client=firefox-b-lm&q=help+to+buy+isa+government+contact+number

Site for conveyancers but might be able to help.

locknova

Thanks again Norman. 

I've tried them but no luck. I've also tried the Money & Pension Service as well as the FCA and Citizens Advice but equally no luck there. 

I did consider contacting a solicitor but slightly averse to this idea due to the prospect of being charged and told they don't know either. 

dimbo61

We are now in February  and you can add another £4,000 to your Lisa in April.
Maybe transfer some of the money from the HTB to your LISA.
Are your parents still working ?
Can you get a £200K mortgage or less if you have savings ?
Are you on the Tenancy agreement with the council for the property 🤔 

Norman_Castle

locknova said:

I did consider contacting a solicitor but slightly averse to this idea due to the prospect of being charged and told they don't know either. 

You'll need a conveyancer for the purchase, have you chosen one? From memory they ask the price of the property you intend to buy to quote their costs. Try asking a few explaining your question.

sheramber

The Help2buy scheme is now closed for loan applications.

https://www.gov.uk/government/publications/help-to-buy-equity-loan-buyers-guide/help-to-buy-equity-loan-2021-2023-applications-closure-frequently-asked-questions-accessible-version

_Penny_Dreadful

locknova said:

New to the forums here and hoping someone may be able to shed some light on a question I've been struggling to find the answer to. Apologies and thanks in advance as I know it'll be a lengthy read!

For context, I'm currently living in a 2 bed semi-detached council property in the South East of England with my parents. We've been living here a number of years which will mean the maximum discount will apply when we ask to buy through the Right to Buy scheme. This discount equates to just shy of £90k (important later).

I'm currently in the process of getting a valuation from the council but my neighbour (other side of my semi detached) took out an equity loan over a year ago and at the time his property was valued at £290k. Both our properties are effectively the same floor plan and condition wise, so I'm using the £290k as a semi accurate guide price for my property. Market prices in my area haven't drastically changed even with recent market conditions.

I opened up a Help to Buy ISA (H2B) years back and have amassed a decent chunk of money in there. The H2B has a condition that if you're buying a house outside London then your "purchase price" needs to be £250k or below. If you meet these then you qualify for the 25% government bonus top up when using it to buy your first home.

Admittedly I didn't think at the time the £250k would apply to my property and due to also opening a Lifetime ISA (LISA), I ended up with the £450k limit in my head and basically focused on saving into the H2B while drip feeding very small amounts into my LISA as an additional retirement fund. 

This now brings me to my conundrum. On the gov.uk page for H2B it specifically states that the home must have a "purchase price" of up to £250k. It probably sounds daft, but I'm struggling to find out the exact definition of this "purchase price" term. 

On the face of it you'd assume it's just the market value of the property. However I'm trying to find out whether I can argue that the purchase price for me would be the market valuation of ~£290k less the council discount of ~£90k, would put my purchase price at below ~£250k. If this is the case then I can use my H2B to qualify for the 25% bonus. This is the crux of the question.

I've asked a mortgage advisor this question at NatWest (didn't do a AiP) and he unfortunately didn't know the answer. I've asked Barclays on the phone and they were also unsure. I've got an appointment with Barclays next month to go through my AiP.

I think not all hope is lost. If I find out my argument above wouldn't be valid, I'm fine with that as rules is rules after all. I've made a backup plan to transfer in the majority of my H2B savings into my LISA by using the tax cut off dates in April as that lets you put on £4k each tax year. But if so then I need to really get my skates on and find out whether the H2B is viable option. 

Given I couldn't find much on this online, I appreciate it's likely an absurdly niche question, but if anyone does know if purchase price can be argued that way, or any advice at all, that would be hugely appreciated.

My guess is that the consideration paid used to determine how much SDLT is payable will be the same value use for the HTB ISA. My reasoning being that the HTB ISA scheme rules refer to purchase price not property value. 

https://www.helptobuyportal.org.uk/scheme-rules.pdf

locknova

Norman_Castle said:

locknova said:

I did consider contacting a solicitor but slightly averse to this idea due to the prospect of being charged and told they don't know either. 

You'll need a conveyancer for the purchase, have you chosen one? From memory they ask the price of the property you intend to buy to quote their costs. Try asking a few explaining your question.

I'm in the process of trying to find a decent conveyancer/solicitor. Once I've done so it'll be one of the first questions I ask them.

locknova

dimbo61 said:

We are now in February  and you can add another £4,000 to your Lisa in April.
Maybe transfer some of the money from the HTB to your LISA.
Are your parents still working ?
Can you get a £200K mortgage or less if you have savings ?
Are you on the Tenancy agreement with the council for the property 🤔 

I'll get a slightly higher government bonus if I can use the H2B. I'm planning on using the tax year cut off to transfer most of my H2B balance into the LISA, but only if I find the LISA is the only option I can use to get the government bonus.

To answer your other questions, one parent not working while the other is past retirement age and likely to fully stop working soon.
I'm fortunate to now be earning enough where 4.5 times my salary gives me well over £200k but am in the process of getting a mortgage broker. 
Whilst I'm not on named on the tenancy agreement, I spoke to the council a few months back and they said I'm able to buy the house as long as I prove I've been living here for at least the past 12 months. This I can easily do and there's no need for me to be added onto the tenancy agreement.