Author Topic: LISAs and renting out your "first home" later  (Read 1190 times)

shelivesthedream

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LISAs and renting out your "first home" later
« on: August 05, 2017, 02:49:51 AM »
I understand that LISAs are to be used for your first property anywhere in the world and for a property for you to live in, not a buy-to-let. However, what if you buy the property, live in it for a few years, and then move and convert it into a rental property? How many years would you have to live in it first?

I haven't been able to find any LISA-specific information, but I presume there must be some comparable legislation about when a home counts as your primary residence and when it counts as a buy-to-let.

I'm also kind of wondering what the government could DO if you've bought the house and lived in it (even if only for a year or two). Try and take your deposit bonus back??

Playing with Fire UK

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Re: LISAs and renting out your "first home" later
« Reply #1 on: August 06, 2017, 01:15:04 AM »
I think it comes down to intent. If you intend to live in the house it is fair game. Martin Lewis had an article on it a while ago (it also covered Help to Buy). He didn't get definitive answers but he gave an example of someone who bought a house with a LISA and then had to relocate for work after the house completed. It was agreed that this fell within the intention of the rules.

It is troubling that there aren't clear guidelines on this. There are clearer rules on mortgages for primary residence vs buy-to-let, but these vary between providers. 

shelivesthedream

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Re: LISAs and renting out your "first home" later
« Reply #2 on: August 06, 2017, 03:34:12 AM »
Aha! Found it - thanks! He's great but there are just so many articles it's a bit overwhelming unless you know what you're googling for.

It is a bit frustrating that there aren't clearer guidelines, but I'm hoping they will emerge. The examples in his article are all about intention, though, and all start off seemingly with the intention to live in the property forever - which very few people do with their first house. My imagined scenario is that my husband and I buy a house for a future three-year contract of his, live in it for three years and tart it up a bit, then either sell it or turn it into a rental property (depending on the property we buy, our inclinations at the time, and what happens next). So... On the one hand we are living in it and on the other hand we are definitely planning to sell/rent out.

TartanTallulah

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Re: LISAs and renting out your "first home" later
« Reply #3 on: August 06, 2017, 05:09:32 AM »
It would be impossible to police without serious state intrusion into people's life choices, and I'm sure the cost of providing the necessary bureaucracy would far outweigh any money recovered by catching the occasional person who spends their LISA on a house they intend to rent out. But I agree that the detail needs to be clarified so that people don't accidentally fall foul of small-print regulations about their obligatory commitment to the property they've bought.



dreams_and_discoveries

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Re: LISAs and renting out your "first home" later
« Reply #4 on: August 06, 2017, 06:16:00 AM »
I have to admit I've not done too much reading on this as I'm not eligible, but I thought the only 'control' was your solicitor when releasing the funds from the LISA, had to do some due diligence and check you were planning to live in the house.

skip207

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Re: LISAs and renting out your "first home" later
« Reply #5 on: August 06, 2017, 07:04:13 AM »
Its actually very easy for HMRC to detect.  I don't know if they will or not though.  They have access to things like land registry, lettings history, LLDS, utility providers, council tax, voters register, DVLA etc. 

They now electronically connect all these data streams together and its basically a few clicks of a mouse to see if you ever lived there or not.

Personally I expect they have bigger fish to fry.

UKMustache

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Re: LISAs and renting out your "first home" later
« Reply #6 on: August 07, 2017, 02:51:10 AM »
Its actually very easy for HMRC to detect.  I don't know if they will or not though.  They have access to things like land registry, lettings history, LLDS, utility providers, council tax, voters register, DVLA etc. 

They now electronically connect all these data streams together and its basically a few clicks of a mouse to see if you ever lived there or not.

Personally I expect they have bigger fish to fry.

You're right about the information we (HMRC) have access to.  As you mention though, I can't see it being an area of concern for HMRC. 
We tend to focus that information on SDLT cases, as there's a lot of people taking the piss with property transactions at the moment.

There's obviously more money at stake if a 'property development' company buys a directors house for a million quid, doesn't pay the additional 3% because they are supposedly doing so for business purposes... but then the director carries on living there (or moves in if they didn't before).
By comparison, if you buy a 200k semi and a couple of years later rent it out.  I doubt anyone will come asking questions.  We're overstretched as it is.

shelivesthedream

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Re: LISAs and renting out your "first home" later
« Reply #7 on: August 07, 2017, 05:07:11 AM »
Its actually very easy for HMRC to detect.  I don't know if they will or not though.  They have access to things like land registry, lettings history, LLDS, utility providers, council tax, voters register, DVLA etc. 

They now electronically connect all these data streams together and its basically a few clicks of a mouse to see if you ever lived there or not.

Personally I expect they have bigger fish to fry.

You're right about the information we (HMRC) have access to.  As you mention though, I can't see it being an area of concern for HMRC. 
We tend to focus that information on SDLT cases, as there's a lot of people taking the piss with property transactions at the moment.

There's obviously more money at stake if a 'property development' company buys a directors house for a million quid, doesn't pay the additional 3% because they are supposedly doing so for business purposes... but then the director carries on living there (or moves in if they didn't before).
By comparison, if you buy a 200k semi and a couple of years later rent it out.  I doubt anyone will come asking questions.  We're overstretched as it is.

I suppose so - I'm just excessively law-abiding and concerned to do the "right thing". My husband is a bit more bothered about just not getting caught...

Wakeuprich

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Re: LISAs and renting out your "first home" later
« Reply #8 on: October 07, 2017, 10:10:32 AM »
Does anyone know if there are any particular rules stopping you from using a Help to Buy ISA, and then getting lodgers in?

I'm looking to buy my first home at the end of this year, to stop my stupid commute to work (Currently 30 M1 miles each way). We take on Circa 40 Undergrads each year, so I could almost guarantee to have a constant flow of people looking for rooms. Would there be any rules preventing this?

skip207

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Re: LISAs and renting out your "first home" later
« Reply #9 on: October 08, 2017, 02:39:10 AM »
So long as its not a HMO I think you will be ok.
I presume you are aware of the "rent a room" scheme?