Lifetime ISAs guide

rachlikeswinter wrote: »

I would most likely be using my LISA as a 5% deposit in a new-build Help to Buy scheme; but if what you're facing is true it sounds like this may present a problem? I have a friend who is buying a new build flat on the help to buy scheme (not using LISA), she completed months and months ago but the build is not due to be finished until September (was originally told Aug but they've overran.)

Are you sure she has completed not just exchanged contracts? I would be surprised if either the solicitors or mortgage company would agree this situation. New build warranties such as NHBC will normally protect a 10% deposit against builder insolvency. Good solicitors would hopefully check this protection is already in place for the development before exchanging contracts and handing over the deposit.

http://www.nhbc.co.uk/Homeowners/WhatdoesBuildmarkcover/

Alex.

rachlikeswinter wrote: »

Well I!!!8217;m pretty certain she said she!!!8217;d completed but I (or she) could be wrong.

I!!!8217;ve been inside the place, it!!!8217;s a massive new build in south london, I doubt the developer is suddenly going to go bankrupt, put it that way.

In the case I was referring to, the build was very near completion with the final steps such as connection of utilities to the building having been arranged. Completion was delayed by a few weeks, then another few weeks, then came notification that Joint Administrators had been appointed.

A few months later, buyers were being asked to increase the size of their deposits (I believe to 25%) so that the finishing touches could be made to the build.

A year after that, the matter remains unresolved. It does not appear there was any insurance on offer to the buyers in this case. Protection was by way of Unilateral Notices (UN1) secured on the development itself, but it transpired these ranked behind other secured borrowings by the developer.

I was asking about nikosc!!!8217;s problem of not being able to use the LISA on an incomplete property, if there is this 90 day timescale he has mentioned... just curious what that could mean for those of us where the 5% deposit/HTB/new build scheme is the only way of buying a property.

You would need to avoid exchanging contracts unless completion (of the build and purchase) could be guaranteed within 90 days, or the money could be held in escrow. It's possible for your conveyancer to request an extension, but it's not clear how this works in practice - it seems to require a known completion date. Otherwise, the rules state that the money must be returned to your LISA and the purchase might fail as a result. You might even be liable to pay the full value of the deposit. Much will depend on the contract with the developer and anyone entering into a situation like this should seek legal advice around this scenario before proceeding.

hmickey wrote: »

I have a santander help to buy isa ~5k, but am now looking into a liption CASH lifeimte isa( should have transferred at end of 17/18 tax year!)
Am confused over how much i can transfer over, is it 4k the maximum each year, if so, what can i do about the remaining amount in my help to buy isa? Is there a charge if i withrdraw it into my current account, or is it best to just leave it there and pay the maximium monthly amount into my help to buy isa and max the 4k with the life time isa

Lipton make Ice Tea so Skipton might be a better LISA provider.

Yes unfortunately the ability to transfer prior year HTB ISA contributions without counting towards the current year limit has now passed so you can only contribute or transfer up to £4k each tax year for a 25% bonus. There is no penalty for withdrawing from a HTB ISA so you can just transfer the other £1k next tax year.

Alex

hmickey wrote: »

edited to skipton
Great informed reply
Once i've setup my lisa, and transferred the max 4k say in August 18, can i/ do i still contribute to my help to isa in the same financial year

Yes while the HTB ISA account is still open subject to the monthly contribution cap.

The only thing you need to be aware of is that there is a rule that all current tax year contributions into the HTB ISA need to be kept together when doing an ISA transfer however this is not an issue if you just withdraw the HTB ISA as cash and add it to the LISA. Sounds like you will be well under the £20k annual ISA contribution cap unless you have other types of ISAs.


Alex

chrisb2085 wrote: »

I'm sure similar has been answered dozens of times before but it's late, I'm tuckered and I'm hoping you lovely people will be gentle with me. So, the £4,000 annual allowance- does that start from the opening of the account or is that in line with the 2018/19 tax year? Say, I open an account today, do I have 364 days to put £4k in to the account or until the end of the 2018/19 tax year? Also, if I put the full £4k in, a day before the end of the qualifying period, would I get the full £1k bonus for that year?

You can add the £4k at any point during the tax year to get the full 25% bonus. If you add the money towards the end of the tax year the bonus might not be added until early into the next tax year as it takes some time for your provider to claim.

If trying to contribute towards the end of a tax year make sure you leave enough time to resolve any issues related to the opening of the account (identity validation, etc) and money transfer (incase the contribution is rejected, etc). Personally I would want it all done by late February.

Alex