Your Lifetime ISA can be used to purchase a house as long as the purchase meets with the required criteria. This article we'll guide you through what the qualifying criteria are and the process to withdraw the funds to buy a house. Click here to find out other information about the Lifetime ISA.
The qualifying criteria
You can use the Lifetime ISA savings and any bonus to put towards a first time buyer's residential purchase if:
the property costs £450,000 or less (for shared ownership purchases, the full market value is used, not the total you are paying)
the withdrawal amount cannot exceed the purchase price
the owner will live in the property after completion (it cannot be a buy to let)
you are buying with a mortgage
you are withdrawing 12 months after the first payment into the Lifetime ISA
you are buying a legal interest in land in England or Wales with a view to the investor becoming a residential property owner
you use either your Lifetime ISA or Help to Buy ISA - you cannot use both
If you fail any of the above criteria you cannot use your Lifetime ISA to fund your purchase. To cash in a Lifetime ISA to buy a house or a flat:-
You complete your Lifetime ISA declaration and send this to your Conveyancer
Your Conveyancer completes their declaration
Your Conveyancer sends both declarations to your Lifetime ISA Manager
Lifetime ISA manager pays the requested funds to your Conveyancer
What do you need to do?
You must complete your Lifetime ISA declaration and send to your Conveyancer. The declaration includes:
amount to be withdrawn
Lifetime ISA Manager details including name and full address
account number
full address of property being purchase
confirmation you are a first time buyer and won't use a Help to Buy ISA
name and address of the seller's conveyancer
that all the conditions for a charge-free withdrawal for the first time residential purchase are met, or, in the case of a purchase of land with a dwelling which is not yet habitable, when that will take place
that the information provided is true and complete to the best of their knowledge and belief
What does your Conveyancer do?
Upon receipt of your declaration, your conveyancer will then complete their own declaration which confirms:
they are an eligible Conveyancer able to act for drawing down a Lifetime ISA
a declaration that you’ve received the information from the investor and that you have no reason to believe it to be untrue or incomplete
purchase price of the property
a declaration that the amount to be withdrawn will only be released towards covering the purchase price of the property
details of the Conveyancer's Client Account where the Lifetime ISA will be sent to
the Conveyancer's unique professional body registration number
a declaration that the information you’ve provided is true and complete to the best of your knowledge and belief
Within 10 working days after completion your Conveyancer will email the Lifetime ISA Manager with the completion date, account number of Lifetime ISA and the Conveyancer's unique professional body registration number.
Read: Conveyancers: first time residential purchase with a Lifetime ISA
What does your Lifetime ISA Manager do?
The Conveyancer sends both declarations to the Lifetime ISA Manager who should pay the amount requested to you within 30 days of receipt of the declaration.
Frequently Asked Questions
Who do you send your declaration to?? You must send it to your Conveyancer as part of their declaration is to confirm the contents of your declaration are correct. When should you request your Lifetime ISA? The Lifetime ISA Manager has 30 days to send your Conveyancer the requested money. Although each case is different, a good time to request the money would be after you have:
Had your mortgage offer issued
Ordered and received your property searches
Contracts have been received and the solicitor has raised legal enquiries
What happens to the money if you fail to complete? After your Conveyancer receives the Lifetime ISA money they will hold it on their Client Account. If 90 days after the receipt of the Lifetime ISA money, you have yet to complete or the purchase has fallen through, your Conveyancer completes a declaration and returns the Lifetime ISA in full. In cases where the transaction could still complete after the 90 days, the Conveyancer has 10 working days to inform the Lifetime ISA Manager about this. If the money is not returned in full then a withdrawal charge will be levied. Who gets the interest whilst the Conveyancer holds the Lifetime ISA in their Client Account? Any interest that accrues on your Lifetime ISA whilst it is held in your Conveyancer's Client Account is due to you. It must not be paid to the Lifetime ISA Manager. Which banks or building societies are registered as Lifetime ISA Managers? Click to see the Government's list of Lifetime ISA managers Do you get charged a Lifetime ISA withdrawal fee? It is free to withdraw your money unless:
the ISA manager has reason to believe the information provided by you is untrue or incomplete; or
the withdrawal is within 12 months of the first payment to that account
What is the withdrawal charge? You pay a 25% withdrawal charge on the the amount you withdraw from your Lifetime ISA not the full amount. Can I use the LISA bonus towards the costs of conveyancing, moving home etc? No. In the declaration that a conveyancing solicitor has to make when releasing the funds, it states that the bonus can only be used towards the purchase price alone of a first time purchase of a residential property (or a 'first share' in a residential property, to cover shared ownership purchases. Why are you forbidden from buying a property which is valued at less than the bonus amount? This is designed to counteract a situation such as if a first time buyer was buying a house for no consideration as a concessionary purchase (click to find out more). If this were to occur, the vendor (in cahoots with the first time buyer) would be able to get Government funds fraudulently. I'm purchasing a New Build. When should I cash in my LISA? You should complete your declaration and inform your LISA manager on instruction, given that you normally have 28 days to exchange after being given notice by the developers and having paid your reservation deposit. Click for more tips about buying a New Build. Can I use my LISA when buying a property through the Help to Buy Equity Loan scheme? Yes. They are completely different entities and there is no restriction here. Do I have to pay my conveyancer a fee for drawing the LISA bonus for a home purchase? Yes - this is likely to cost £60 Inc VAT.
If you would like further information on the Help to Buy ISA, please visit their webpage www.helptobuy.gov.uk.
For more helpful guides and useful information, please visit our website www.quicklyconvey.co.uk
If you are looking for a Solicitor to handle any of your property matters, please contact us on 020 3963 7310 or email us on info@quicklyconvey.co.uk
Please note that these guides are for informational purposes only, and do not constitute legal advice.
Credit to Sam Conveyancing for the information in this guide
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