Lifetime ISA + £460k shared ownership using NPV method – anyone successfully done this?

calvin22580

Hi all,

I’m a first-time buyer trying to use a Lifetime ISA for a shared ownership purchase and getting completely different answers from providers, so I’m hoping someone here has real-world experience.

My situation:

• New-build shared ownership house in Cambridgeshire

• Full open-market value: £460,000

• I’m buying a 25% share (premium £115,000)

• Rent: 2.75% p.a. on the unsold 75%

• Lease term: 990 years

• I’m a first-time buyer, and this will be my main residence

• I want to use my LISA towards the deposit

The standard rule is that the property must be £450,000 or less. However, HMRC’s conveyancer guidance for Lifetime ISAs has a Shared ownership section which seems to allow a different way of working out the “full sale price” for the £450k test.

If you go to the gov.uk site and search for:

Conveyancers: Lifetime ISA technical guidance

and then scroll to the “Shared ownership” heading, you’ll see the bit I mean. It says that for shared ownership the full sale price can be calculated either by multiplying up the equity share or based on:

the price paid for the equity share being purchased plus the net present value of the rental payments due over the term of the lease.

Using that equity+NPV method (with the usual 3.5% discount rate), the full sale price in my case comes out well under £450,000, even though the open-market value is £460,000.

Provider responses so far:

• Some providers (e.g. Hargreaves Lansdown, Tembo) have told me they will only look at the headline full market value and treat anything over £450k as ineligible, regardless of any NPV calculation. They say their reporting to HMRC only allows a single “property price” figure and that it has to be the full value.

• One provider (Paragon Bank) has replied in writing that they can follow the HMRC shared ownership guidance and will accept a calculation of the full sale price based on the price paid for the equity share plus the net present value of the rent over the lease term, and that they are happy for my conveyancer to enter this calculated figure (as long as it’s <£450k) as the “property value/purchase price” on their LISA declaration forms.

So I now have:

• One provider explicitly willing to use the NPV-based full sale price;

• Several others explicitly refusing and insisting on the £460k headline value.

My questions:

1. Has anyone here successfully used a Lifetime ISA on a shared ownership property with a full market value above £450k, relying on that equity+NPV method (especially with Paragon)?

2. Are there any known pitfalls or risks with doing this – e.g. HMRC later rejecting the purchase or clawing back the bonus if they disagree with the calculation?

3. Does anyone know how HMRC actually expects ISA managers to report the “purchase price” in these shared ownership NPV cases – is it meant to be the open-market value, or can it genuinely be the NPV-based full sale price from the conveyancer guidance?

I’ve also emailed HMRC’s savings/ISA team for clarification, but I’d really value any practical experiences from people who’ve actually gone through this in real life.

Thanks in advance for any insights