Lifetime ISAs can be a fantastic way to save for your first home, but timing and procedure are crucial when it comes to using them in a property purchase. Solicitors must ensure the right steps are taken well in advance of the date of entry and settlement, otherwise delays can occur.
What is a Lifetime ISA?
A Lifetime ISA (LISA) is a type of savings account introduced by the UK Government in 2017 to help people save either for their first home or for retirement. Available to anyone between the ages of 18 and 39, savers can contribute up to £4,000 each year, and the Government adds a 25% bonus on top of what is saved. This means that if you save the full £4,000 in a year, you will receive an additional £1,000.
The savings can then be used in two ways:
- To buy your first home, provided it costs £450,000 or less.
- To fund your retirement, once you reach the age of 60.
If you’re experiencing problems after buying a house in Scotland, you’re not alone, but your legal options may be more limited than you think.
In this article, we explore what rights you have as a buyer under Scottish property law, how the Scottish Standard Clauses apply, and when (if ever) you might be able to claim against the seller or the surveyor responsible for the Home Report.
Benefits of Using a Lifetime ISA
For first-time buyers, the Lifetime ISA provides a significant boost to a deposit. The 25% Government bonus makes saving quicker and more rewarding, and unlike the older Help to Buy ISA (which closed to new applicants in 2019), the LISA offers a higher maximum property value of £450,000.
There is also greater flexibility, as LISAs can be held in either cash or stocks and shares form. A cash LISA works much like a savings account, while a stocks and shares LISA invests your savings with the potential for growth, although there are investment risks involved.
Timing is Everything
While the benefits of a LISA are clear, Mark McBride, Director at Wallace Quinn, has recently highlighted the importance of dealing with Lifetime ISAs properly during the conveyancing process. “Issues can arise when funds are not requested in good time or when clients do not understand the steps required to release their savings.
The key points to keep in mind are:
- Early disclosure: Clients should provide their solicitor with a LISA statement at the outset, ideally when completing initial risk assessments.
- Type of account matters: Cash LISAs can usually be released within a week (for example, with providers like Moneybox), but stocks and shares LISAs must first be sold, which can add significant time.
- Contacting providers: Clients must authorise their provider to release funds to their solicitor. Without this, nothing can progress.
- Drawdown times: Funds can take up to 30 days to arrive, so solicitors and clients need to work backwards from the anticipated date of entry. In practice, this means making arrangements 30 to 45 days before settlement.
- No conclusion without funds: A solicitor should not conclude missives until the LISA funds are ordered and confirmed. Otherwise, the risk of a shortfall on the settlement date is too high.”
Why Early Action Protects Your Purchase
For many first-time buyers, the Lifetime ISA represents the bulk of their deposit. If those funds are not available on the agreed settlement date, it can jeopardise the entire transaction. New-build purchases, in particular, require careful diary management because completion dates are often projected weeks in advance.
By raising the issue of LISA funds at the very beginning of the transaction, both the solicitor and the client can ensure there are no last-minute surprises.
How Wallace Quinn Can Help
At Wallace Quinn, we have extensive experience guiding clients through the conveyancing process, including transactions involving Lifetime ISAs. We know the procedures inside out and will make sure all steps are taken well in advance of settlement so that your purchase runs smoothly.
If you are a first-time buyer and plan to use a Lifetime ISA, it is important to discuss this with your solicitor as early as possible.
Contact Wallace Quinn today for clear, practical advice on buying your first home in Scotland and making the most of your Lifetime ISA savings.
🔎 Frequently Asked Questions about Lifetime ISAs and Buying a Home in Scotland
Q: Can I use a Lifetime ISA to buy any property in Scotland?
A: You can use a Lifetime ISA to buy your first home in Scotland provided the property costs £450,000 or less. The purchase must be funded with a mortgage (cash purchases do not qualify), and your solicitor must draw down the funds.
Q: How long does it take to get Lifetime ISA funds released?
A: It depends on the provider and whether you hold a cash or stocks and shares LISA. Cash LISAs can sometimes be released in around a week once authorised, but stocks and shares LISAs need to be sold first, which can take significantly longer. To avoid problems, you should allow up to 30 days.
Q: Do I need to tell my solicitor if I am using a Lifetime ISA?
A: Yes. You should let your solicitor know at the very start of the transaction. They will need a copy of your LISA statement and will guide you through the process of instructing the provider to release the funds in good time before your date of entry.
Q: Can I still use a Help to Buy ISA instead of a Lifetime ISA?
A: Help to Buy ISAs closed to new savers in 2019, but existing accounts can still be used. However, they have a lower property price cap than Lifetime ISAs, so many first-time buyers now rely on LISAs
Q: What happens if my Lifetime ISA funds are not ready by the settlement date?
A: If the funds are not available on the date of entry, you risk not being able to complete your purchase. This could cause the transaction to fall through or lead to penalties under the missives. That is why it is so important to deal with the LISA process early.
Q: Does Wallace Quinn deal with Lifetime ISA cases regularly?
A: Yes. We frequently act for first-time buyers using Lifetime ISAs, including clients with providers such as Moneybox, Newcastle Building Society, and AJ Bell. We know the steps required to ensure funds are released in good time and will make sure you are fully prepared.
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