LISA 12 Month Minimum Penalty Clause?

GreenRock32

Hi all, 

I am looking for some advice on how to proceed with withdrawing a LISA from AJ Bell to help with buying my first property. 

I opened a Help to Buy ISA in 2019 with Lloyds bank and chose to transfer these funds to a LISA with AJ Bell in July 2024 due to the greater restrictions on spending in the old Help to Buy ISA scheme.

I meet all the conditions of a first time buyer and I am now looking to use the LISA to purchase a property within the maximum amount allowed. However, I have been extremely disappointed to see that I cannot withdraw the funds from my AJ Bell LISA without having the 25% penalty because according to AJ Bell, the LISA needed to be open for at least 12 months to allow me to claim the bonus. I had never seen this clause during any research prior to getting the LISA (including on MSE) and so that condition was completely unknown to me until when I looked to withdraw the money. 

I have checked my initial welcome letter and document summary with AJ Bell and there is no mention of this clause. I am wondering, is this an enforceable penalty from AJ Bell? It seems extremely unfair since I have had my money locked into a “government house buying scheme” since 2019 and only happened to change it to a LISA within the last year (due to the ridiculous restrictions on the old scheme!). 

I have run the numbers and given the SDLT increases from April, I am still better off to withdraw the money with the 25% penalty than to wait until July next year. However since this doesn’t seem to be a government enforced clause, I was wondering if it is even enforceable by AJ Bell. 

Many thanks in advance for any advice or comments. 

gravel_2

AJ Bell is correct. If you use the funds to buy a house before July 2025 then you will be penalised.

You must not have researched this very well if you concluded it's not a government requirement...:
https://www.gov.uk/lifetime-isa

You can use your savings to help you buy your first home if all the following apply:

• the property costs £450,000 or less
• you buy the property at least 12 months after you make your first payment into the Lifetime ISA
• you use a conveyancer or solicitor to act for you in the purchase - the ISA provider will pay the funds directly to them
• you’re buying with a mortgage

  
  

eskbanker

GreenRock32 said:

However, I have been extremely disappointed to see that I cannot withdraw the funds from my AJ Bell LISA without having the 25% penalty because according to AJ Bell, the LISA needed to be open for at least 12 months to allow me to claim the bonus. I had never seen this clause during any research prior to getting the LISA (including on MSE) and so that condition was completely unknown to me until when I looked to withdraw the money.

As well as being highlighted on the government pages, it's a feature of the product that's mentioned prominently in many other places, including the very first section of the MSE LISA article:

• How long do I need to have a LISA? You must have had a LISA for a year to be able to use it (and the government bonus) towards your first home.

https://www.moneysavingexpert.com/savings/lifetime-isas/#what

sammy_zammy

For good measure, here it is from AJ Bell:

https://www.ajbell.co.uk/sites/default/files/useful-forms/AJBYI_LISA_key_features.pdf

“you'll need to have held funds in your AJ Bell Lifetime ISA (or another Lifetime ISA which has been transferred to your Lifetime ISA with us) for at least 12 months.”