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Do I lose my Lifetime ISA allowance if I move in with my new partner?

07 January 2021

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Question by Danielle

I have bought a flat using a LISA.

I have now met someone and wanted to know what my options are if I would like to move in with him.

Do I have to re-mortgage or can I change my mortgage to buy to let and rent my flat out.

I have seen conflicting advice about this as I know a LISA is designed to be used for first time property that you will live in (which it was when I bought) but read that circumstances changing could mean you could change the mortgage on it.

I wondered if meeting someone would qualify as circumstances changing?

Thanks


Answered by Chelsea Dennison

his remains a bit of a grey area with regards to Help to Buy and Lifetime ISAs, although I found a good article which you mind find helpful to take a look at: https://blog.moneysavingexpert.com/2016/04/can-you-rent-out-a-home-bought-with-a-help-to-buy-isalifetime-isa/

In summary, the treasury confirmed that

“The intention of the Help to Buy ISA policy is to provide support to first-time buyers who are struggling to take the first step on the housing ladder. In order to receive a Government bonus the individual in question must make a declaration at the time of purchase that they intend to live in the property as their sole residence.

We recognise, however, that an individual’s personal circumstances may change at some point in the future, in which case they may need to rent out their property.

The Government is clear that it will not claim Help to Buy ISA bonuses back from people whose personal or professional circumstances have changed and who need to make different arrangements for their property, for example if their employment status or family circumstance changed”.

Martin Lewis has then gone on to confirm with the Treasury some examples of a change in circumstances to see if any of these would be challenged by the government. These examples include meeting someone after living in your property for two years and wanting to move in with them.

Therefore, the Treasury have confirmed that so long as the property was purchased with the intention of living in it, and you have been living in the property for two years then you will be able to rent this out without needing to worry about losing your Lifetime ISA bonus. It isn’t clear what the situation would be if you have been living in the property for less than two years.

With regards to changing your mortgage, it would be best to speak to your mortgage provider about this as some mortgages include the ability to rent the property out on a residential mortgage provided that you receive permission from your provider and so you will be able to continue with your residential mortgage.

Answered by

Chelsea Dennison

Senior Financial Planner

I studied Mathematics at The University of Manchester and achieved a 2:1 in June 2015. After graduating, I moved to Paris for a year where I was an Au Pair and attend language school to improve my French to a conversational level. When I returned home in August 2016, I worked at L&G retirements before I started my career in Financial Planning on the PN grad scheme in July 2017. I passed my Diploma in just 10 months whilst working full time and in September last year gained all the credits needed for the Advanced Diploma (not quite enough experience for Chartered but watch this space!).