Missed out on Help to Buy bonus due to wrong procedure

kraven_t_punter

I had £12,000 in my Help to Buy ISA account which I used to pay the deposit on my new home.

Unfortunately, when I required the money to pay the deposit, I was not informed of the correct procedure for doing this. I therefore tried to withdraw the money from the account on my mobile banking app. At this point, a message popped up telling me that to be eligible for the government bonus, I would require at least £1,600 in the account, so I withdrew £10,400 and left £1,600 in the account. I then used the £10,400 to pay towards the deposit.

When I queried with my solicitors how I claim the bonus a day or so later, they informed me that I was to close the account and obtain the closing statement. Unfortunately at this point I only had £1,600 in the account, plus some interest of £370.64 on top, so my closing balance on my statement was £1970.64.

The solicitors have gone through the bonus claim phase, but I have only been awarded a bonus of £492.66. I explained to them that I did have £12,000 in the account which I had saved up over 5 years, and I provided a statement that proves this. They advised that the bonus was calculated on the closing statement, so unfortunately there is nothing they can do.

I find this extremely unfair, as I did use the funds in the account for the intended purpose, but I was not informed of the correct procedure for obtaining the bonus. Therefore, due to one small mistake, I have now missed out on over £2500, which would have helped towards my solicitor fees.

Is there anything I can do to prove that I did have the funds in the account and claim the full bonus?

ellsbells97

I did a good amount of research before I closed my HTB and saw loads of warnings to not transfer anything out of the account before closure, as the closing statement needs to reflect the amount on which the solicitor is claiming the balance. Santander's mobile banking app conversely says to transfer all money out of the account before closing it so I understand how you could have fallen into that trap. I stopped what I was doing and called them instead to close it as the mobile banking app's information didn't match what I'd read and they sorted it out over the phone. 

I'm not sure if there is anything you can do here - the closing statement is the method of showing what was in the account and the only information your solicitor/the government can go off to claim the bonus. As much as I honestly sympathise and I understand how you got into this situation, I don't think you can say you weren't informed of the correct process - there is a lot of info out there on closing the ISAs and claiming the bonus, a lot of which says not to touch the balance in there before closure.

I guess you could complain to the bank that their app gave you the wrong guidance and see if you can recoup anything via them?

kraven_t_punter

Hi ellsbells,

Thanks for the response. I have logged a complaint with my bank, but I don't expect them to reimburse the £2500 I lost out on, as ultimately the money was never going to be paid to me by the bank.

I am waiting to see the outcome of the complaint with the bank, but I don't expect it to go anywhere, so the next step will be the finacial ombudsman.

Obviously this is my first house purchase, and the process had been dragging on for a long time, so I was eager to get the deposit paid as soon as possible.

My personal opinion is that the bonus should have been paid on the full £12,000 as I did use it for paying the deposit which is the intended purpose, and I have the paperwork to prove this. It feels to me like the Help to Buy scheme have wriggled out of paying the bonus on a technicality, and this is deliberatly done to catch people out.

kimwp

kraven_t_punter said:

Hi ellsbells,

Thanks for the response. I have logged a complaint with my bank, but I don't expect them to reimburse the £2500 I lost out on, as ultimately the money was never going to be paid to me by the bank.

I am waiting to see the outcome of the complaint with the bank, but I don't expect it to go anywhere, so the next step will be the finacial ombudsman.

Obviously this is my first house purchase, and the process had been dragging on for a long time, so I was eager to get the deposit paid as soon as possible.

My personal opinion is that the bonus should have been paid on the full £12,000 as I did use it for paying the deposit which is the intended purpose, and I have the paperwork to prove this. It feels to me like the Help to Buy scheme have wriggled out of paying the bonus on a technicality, and this is deliberatly done to catch people out.

It's not really a technicality though? You are allowed to take money out, at which point it is no longer eligible for the bonus. 

artyboy

I know this is going to sound harsh, but ultimately it is up to you to determine the correct procedure for using HTB funds, and not for anyone else to tell you. Of course if the bank gave you materially misleading information then that can put them on the hook, but from what you've said, you simply misunderstood what they were telling you.

Its a hard lesson but I think you will struggle to lay the blame anywhere else.

sheramber

The bank were correct in advising you that you needed to have £1600 in the account to get a bonus.

Unfortunately, you interpreted that as the bonus on the £12,000  but the bonus is only paid on the final balance at closure.  That was a costly mistake.

 Otherwise you could have withdrawn the money to buy a car  or pay for a holiday and then claim the bonus on money that was not used for buying a house.

How would they know what the money was used for?

It is not up to the bank to tell you how to manage your Help to Buy ISA.  They gave you a timely warning about the minimum amount needed to get a bonus,

kraven_t_punter

My opinion is that if you are using the money to pay for the deposit on a house, it shouldn't matter how you withdraw the funds, as long as you can prove they are being used for that purpose. I have bank statements which prove when and where the money was sent to, and the fact that I closed my account shortly after, surely prove that the money I had saved went towards paying for a house deposit.

I appreciate it was my fault that I didn't check the rules, and I should have been better prepared for it, but as I mentioned, I felt under pressure to pay the deposit as soon as possible to speed things along, so took one misstep which has cost me. Unfortunately once I had withdrawn the funds you are unable to deposit them back, so couldn't have corrected the mistake even if I had realised sooner.

Seems a bit harsh for Help to Buy to refuse to pay out just because "them's the rules". I feel this could catch a lot of people out.

sheramber

But you could have withdrawn the £12.000 funds by closing the account to speed  things along.

Why would there be rules if everybody didn't have to stick to them?

The rules were set by the Government , who set up the scheme.

They are  not there to catch people out.  They are there to be fair to everybody.

kraven_t_punter

So the intention holds no weight at all? I withdrew the money to put down a deposit on a house, which is exactly what you are suppose to do.

This is the exact wording of the warning I got from my bank when I withdrew the money:

"Any funds withdrawn or transferred from your account will no longer count towards the Government Bonus. If you withdraw or transfer all your funds, you must close your account to be eligible to apply for the Government Bonus. Your account must have a minimum balance of £1,600 at the time of closure to be eligible to apply for the Government Bonus."

My interpretation of the above was that I would not be able to apply for the government bonus unless I left £1600 in the account. It my opinion, it does not clearly state that the procedure to obtain the government bonus is to close the account.

In any case, I was cautious about closing the account in case the sale fell through.

kimwp

kraven_t_punter said:

So the intention holds no weight at all? I withdrew the money to put down a deposit on a house, which is exactly what you are suppose to do.

This is the exact wording of the warning I got from my bank when I withdrew the money:

"Any funds withdrawn or transferred from your account will no longer count towards the Government Bonus. If you withdraw or transfer all your funds, you must close your account to be eligible to apply for the Government Bonus. Your account must have a minimum balance of £1,600 at the time of closure to be eligible to apply for the Government Bonus."

My interpretation of the above was that I would not be able to apply for the government bonus unless I left £1600 in the account. It my opinion, it does not clearly state that the procedure to obtain the government bonus is to close the account.

In any case, I was cautious about closing the account in case the sale fell through.

"Any funds withdrawn or transferred from your account will no longer count towards the Government Bonus."

They could not have been clearer.

saajan_12

kraven_t_punter said:

So the intention holds no weight at all? I withdrew the money to put down a deposit on a house, which is exactly what you are suppose to do.

This is the exact wording of the warning I got from my bank when I withdrew the money:

"Any funds withdrawn or transferred from your account will no longer count towards the Government Bonus. If you withdraw or transfer all your funds, you must close your account to be eligible to apply for the Government Bonus. Your account must have a minimum balance of £1,600 at the time of closure to be eligible to apply for the Government Bonus."

My interpretation of the above was that I would not be able to apply for the government bonus unless I left £1600 in the account. It my opinion, it does not clearly state that the procedure to obtain the government bonus is to close the account.

In any case, I was cautious about closing the account in case the sale fell through.

Potentially the 2nd and 3rd sentence isn't the most natural or clear language on what you SHOULD do, but it does clearly state what you SHOULDN'T do, which is withdraw funds as they won't count to the bonus. 

At most it could lead to confusion and the customer asking for clarification. In no way does it suggest that you should withdraw without closing the account.