Lifetime ISAs; Our Preston Solicitors’ Advice On How Not To Miss Out
Posted on 30th June 2020
Taking that first step onto the property ladder can take years and years of saving, for many prospective purchasers. For first-time buyers, we have recently seen more and more government backed schemes, that aim to aid first-time buyers in purchasing their first property. For more information on the options available to first-time buyers, see our blog.
Just one of these initiatives relates to the lifetime ISA. Differing to a help to buy ISA, more information on which can be found, here, the lifetime ISA can see huge benefits to prospective buyers, purchasing their first home.
For savvy savers, the lifetime ISA allows individuals, aged between 18-40, to open an account that will assist them with their first property purchase. Alternatively, the ISA can be steadily topped up and used for retirement purposes.
Our property conveyancing solicitors are, of course, most concerned with clients whom wish to utilise their lifetime ISA to facilitate their property purchase. So, how does the lifetime ISA work for first-time buyers?
- The account allows individuals to deposit up to £4,000.00, per year, in return for a government bonus, at 25% on the funds in the account.
- The property must be purchased at least 12 months after the ISA has been opened. As you can see, this is not a ‘quick fix’ for first-time buyers, but can allow for valuable savings.
- The property being purchased must have a purchase price less than £450,000.00, and is to be purchased with the assistance of a mortgage.
- It is important to note that early withdrawals, i.e. those not being used in conjunction with a property purchase or retirement, can attract penalties. Such penalties currently stand at 25% which, in essence, rids the bonus that you have earnt on the funds. So, aim not to withdraw funds early, in order to avoid a penalty.
- For more information on the mechanics of the lifetime ISA, and how it works, see gov.uk.
The property purchase must be carried out by a conveyancer, which is where the expertise of MG Legal’s property solicitors comes in. When purchasing your first home, you need an approachable solicitor that you can trust; this will likely be the biggest purchase you ever make after all. So, get in touch with our local solicitors, at property@mglegal.co.uk, where our team would be delighted to assist.
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So, what does your property conveyancing solicitor do, in connection with your lifetime ISA?
Where being used to purchase a property, your conveyancing solicitor will redeem the bonus acquired, on your behalf. There are, of course, some rules on how this is to be executed, which include the following:
- Your conveyancer is required to submit various pieces of documentation to the ISA provider. These include:
(a) Conveyancer declaration: Confirming your conveyancing solicitors’ instructions in respect of the lifetime ISA.
(b) Investor declaration: Which is completed by the individual whom holds the account, confirming the intentions in respect of the ISA, for example, to facilitate the purchase of a property. Specific details confirming the property address and purchase price are also required.
(c) ID: Your conveyancer will also be required to submit a certified copy of your ID to the ISA provider, for confirmation of your identity. This will, of course, always be requested by your property solicitor upon commencement of your matter, for reasons that are outlined in our blog, that can be viewed, here.
- The bonus achieved on the funds held in the ISA account are remitted to the client account of your conveyancing solicitor, in order to facilitate the property purchase. These cannot simply be sent to your personal account.
- There is then a deadline as to the period of time in which the ISA funds are to be used. This, usually, is set at 90 days. Should the purchase not complete, for whatever reason, during this time, your conveyancer is required to return the funds to the ISA manager.
- The release of funds can take up to 30 days. It is, therefore, imperative to advise your conveyancing solicitor of your intentions to use any lifetime ISA funds, upon commencement of your matter, in order that the same can be dealt with, without delay. See our blog, for more information, here.
As you can see, the lifetime ISA can bring about welcomed benefits to those looking to buy their first property. On average, those whom open lifetime ISAs, see benefits of over £600.00 each year. Our Preston solicitors have, however, recently discovered that many may be missing out on these benefits.
2018 figures showed that there were some 17.5 million individuals, whom were eligible to open a lifetime ISA. Astonishingly, data from HMRC found that just 230,000 of those had opened such account. This, therefore, means that many may be missing out on these bonuses. So, do not sit back and wait for the day that money grows on trees, we may be waiting a long time, and look into how a lifetime ISA may help you.
This is just the first part of the fairy tale, in purchasing your first dream property. Once funding has been secured and a property to purchase in sight, you should instruct the services of MG Legal’s property experts, to guide you smoothly through the process.
For your fixed-fee conveyancing quote, with no hidden extras, submit an online enquiry with us today, here, for a prompt response outlining all fees and disbursements payable. Rest assured that, at MG Legal, we do not charge any additional fees for dealing with lifetime ISAs, and are on hand to make the home buying process a pleasure for you.
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