LIFETIME ISA for self build of first home

Aubrey900

masonic said:

Aubrey900 said:
Are you suggesting that had we purchased the land using the funding from our LISA accounts, that we would have been able to withdraw penalty free? 

Yes, potentially even the minimal work done at the time you purchased may have allowed this if you could have secured the mortgage, although you'd be working against the clock to complete on the timescales set out for penalty free withdrawals (~180 days). Typically I think people going down this route exchange contracts, but don't complete on the land purchase until some way into the development.

masonic said:

Aubrey900 said:
Are you suggesting that had we purchased the land using the funding from our LISA accounts, that we would have been able to withdraw penalty free? 

Yes, potentially even the minimal work done at the time you purchased may have allowed this if you could have secured the mortgage, although you'd be working against the clock to complete on the timescales set out for penalty free withdrawals (~180 days). Typically I think people going down this route exchange contracts, but don't complete on the land purchase until some way into the development.

Delaying completion of the land purchase wouldn’t have been an option for us, as it wouldn’t have hindered our ability to progress with the build. 

Long & short - appears LISA’s aren’t supportive of first time buyers who are self building. It’s totally heartbreaking as we have continued to deposit £4,000 per year into our accounts, in the years preceding purchase of the land. Had we known we would face this penalty, we would have chosen to save our money elsewhere. 

 

masonic

Aubrey900 said:

Long & short - appears LISA’s aren’t supportive of first time buyers who are self building. It’s totally heartbreaking as we have continued to deposit £4,000 per year into our accounts, in the years preceding purchase of the land. Had we known we would face this penalty, we would have chosen to save our money elsewhere. 

TBH, they seem to have shoehorned in that provision, probably without much consideration of how it was supposed to work in practice, perhaps in the hope that "the market will provide". The same sort of thing would happen if you buy a derelict property at auction and need to complete quickly, but have substantial costs fixing it up that cannot be funded using a LISA.

Did you engage with a solicitor at any stage who gave you professional advice that this route to using your LISA would be possible?

Aubrey900

masonic said:

Aubrey900 said:

Long & short - appears LISA’s aren’t supportive of first time buyers who are self building. It’s totally heartbreaking as we have continued to deposit £4,000 per year into our accounts, in the years preceding purchase of the land. Had we known we would face this penalty, we would have chosen to save our money elsewhere. 

TBH, they seem to have shoehorned in that provision, probably without much consideration of how it was supposed to work in practice, perhaps in the hope that "the market will provide". The same sort of thing would happen if you buy a derelict property at auction and need to complete quickly, but have substantial costs fixing it up that cannot be funded using a LISA.

Did you engage with a solicitor at any stage who gave you professional advice that this route to using your LISA would be possible?

I think you are right. The guidelines with regards to self builds and LISA’s appear to be a lot less comprehensive than if we’d have gone down the more ‘standard’ route of a house purchase. 

Yes we engaged with a solicitor re: purchase of the land & obtaining the self build mortgage. We have also been supported by a financial advisor throughout the process - however it appears they were unclear on the specification as we are now. 

masonic

Aubrey900 said:

Yes we engaged with a solicitor re: purchase of the land & obtaining the self build mortgage. We have also been supported by a financial advisor throughout the process - however it appears they were unclear on the specification as we are now.

If they advised you on the use of your LISA, then there may be an avenue to get some redress from them. You are essentially going to be down a net 6.25% on whatever you withdraw. If you could have avoided depositing some of that money, then perhaps they should put you back into the position you would have been in if you hadn't paid it in.

seinster_2025

Aubrey900 said:

masonic said:

Aubrey900 said:

Long & short - appears LISA’s aren’t supportive of first time buyers who are self building. It’s totally heartbreaking as we have continued to deposit £4,000 per year into our accounts, in the years preceding purchase of the land. Had we known we would face this penalty, we would have chosen to save our money elsewhere. 

TBH, they seem to have shoehorned in that provision, probably without much consideration of how it was supposed to work in practice, perhaps in the hope that "the market will provide". The same sort of thing would happen if you buy a derelict property at auction and need to complete quickly, but have substantial costs fixing it up that cannot be funded using a LISA.

Did you engage with a solicitor at any stage who gave you professional advice that this route to using your LISA would be possible?

I think you are right. The guidelines with regards to self builds and LISA’s appear to be a lot less comprehensive than if we’d have gone down the more ‘standard’ route of a house purchase. 

Yes we engaged with a solicitor re: purchase of the land & obtaining the self build mortgage. We have also been supported by a financial advisor throughout the process - however it appears they were unclear on the specification as we are now. 

@aubrey900, did you ever get to the bottom of this? 

I ask as my partner and I are deliberating over whether or not to invest in LISA’s and want to avoid having to withdraw with the dreaded 25% penalty fee as we also want to use it to fund the construction of a self build on land we already own.

Thank you!