Conveyancers: first time residential purchase with a Lifetime ISA
Find out about first time residential purchases with funds from a Lifetime Individual Savings Account (ISA) if you’re a conveyancer.
From 6 April 2018 funds (including any bonus) can be withdrawn from a Lifetime ISA to put towards a first time residential purchase if:
- the property costs £450,000 or less
- the withdrawal is no more than the purchase price of the property
- the investor will live in the property
- the property is being purchased with a mortgage
- the property purchase is at least 12 months after the first payment was made into the Lifetime ISA
- the purchase must be a legal interest in land in the UK with a view to the investor becoming a residential property owner
If the investor is a Crown servant serving overseas, or their spouse or civil partner who is unable to occupy the land as their only or main residence at the time of acquisition, they must intend to occupy the land in the future.
If the investor has a Lifetime ISA and a Help to Buy ISA, they can only user the government bonus from one of them to buy their first home.
What the investor must tell you
The investor must tell you:
- the amount they want to withdraw
- details of their Lifetime ISA manager including name, address and postcode
- the account number from which the withdrawal will be made
- they’re a first time buyer
- the full address and purchase price of the residential property
- the withdrawal will only be used to cover the purchase price of the property
- that they aren’t also claiming, or have claimed, a Help to Buy ISA government bonus claim in connection with the purchase of any property
- the name and address of the seller’s conveyancer (if known)
- 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
A model declaration example with text that must be included is attached below.
What you must send the ISA manager
You must provide the following information to the Lifetime ISA manager to release the funds for the purchase:
- a declaration you’re an eligible conveyancer
- 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
- the 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 your account which will receive the withdrawn funds
- your 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
A model declaration example with text that must be used is attached below.
What the ISA manager should do
The ISA manager should pay the amount requested to you within 30 days of receipt of the declaration.
The charge-free withdrawal won’t go ahead if:
- the ISA manager has reason to believe the information provided by you is untrue or incomplete
- the withdrawal is within 12 months of the first payment to that account
When the purchase is complete
You must tell the ISA manager either by post or email, within 10 business days of the purchase being completed the:
- date of the purchase completion
- account number of the Lifetime ISA from which the withdrawal was made
- your unique conveyancer reference number, with the appropriate professional body
If the purchase failed or isn’t completed within 90 days
The Lifetime ISA regulations state the purchase must be completed within 90 days of you receiving the withdrawn amounts.
If the sale isn’t completed you must, within 10 business days after the 90 days have elapsed provide the Lifetime ISA manager with:
- a declaration that the purchase of the residential property hasn’t completed
- the amount of the withdrawal that is being returned and, if it’s not the full amount, an account of any shortfall
- the name and address of the account investor
- the account number of the Lifetime ISA from which the withdrawal was made
- your unique conveyancer registration number, with the appropriate professional body
- a declaration, to the best of your knowledge and belief, as to whether any of the requirements for a charge free withdrawal hasn’t been complied with or any information provided by you or the account investor is not true or complete
You must return the full amount withdrawn directly to the ISA manager. If there’s a shortfall in the amount returned, this will be treated as a withdrawal and will be subject to a withdrawal charge.
Any interest which arises while the funds are held by you should be paid directly to the investor and won’t be treated as a withdrawal charge, as it didn’t originate from the Lifetime ISA. This mustn’t be paid to the ISA manager.
If the purchase is delayed beyond 90 days
If the property purchase is continuing but isn’t expected to complete within 90 days of withdrawing funds from the Lifetime ISA you should ask the ISA manager for a 60 day extension, followed by a further 30 day extension if needed.
ISA managers must report these extensions to HM Revenue and Customs (HMRC).
Your obligations
HMRC has the power to request any ‘relevant person’ to provide information relating to a withdrawal from a Lifetime ISA and the power to inspect documents. ‘Relevant person’ includes any person who may have received the whole or part of an amount withdrawn from a Lifetime ISA and may include you.
Penalties can be charged if there are any inaccuracies when replying to HMRC’s information notices.
Further guidance for conveyancers about Lifetime ISAs is available.
Last updated 28 March 2018 + show all updates
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The example of a model investor declaration has been updated.
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First published.