Lifetime Individual Savings Accounts (LISAs) for First Time Residential Purchases

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We are often asked by our clients if we can assist them if they have a Lifetime Individual Savings Account ( a ‘LISA’) and whether they can use the funds held in a LISA for purchasing a property. The answer to whether we can assist is ‘yes’ but the answer to whether the funds can be used in a purchase transaction depend on a number of factors.

As a bit of background information, a LISA can be opened by anyone who is between 18 and 39 years of age. A person can contribute up to £4,000 a year into the LISA, until the person is 50 years of age. The government will add a 25% bonus (up to a maximum of £1,000 per year) to those savings. You can have stocks, shares, or cash in a LISA.

The funds held in a LISA can be withdrawn at anytime, however, the funds can only be withdrawn without incurring a 25% penalty in certain circumstances. These circumstances include a first time residential purchase where some additional conditions are met.

For a first time residential purchase, the funds in a LISA can be used without deduction where the funds are being put towards the purchase price, the purchase price of the property is no more than £450,000.00, the amount withdrawn is no greater than the purchase price of the property, you will live in the property as your primary residence, and the property is purchased with a mortgage (not a buy to let mortgage), and the first payment into the Lifetime ISA was made at least 12 months ago.

There are additional forms and declarations that need to be completed, both by you and by your solicitor, so it is wise to advise your solicitor that you have a LISA and intend to use the funds early in your transaction.

Please contact us if you require any further information regarding the above at [email protected]

Whitney Jacque, Solicitor

Congratulations to Kelsey Ling

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Congratulations to Kelsey Ling our junior secretary who had completed her apprenticeship with us and is now working in the Family Department. 

Passing this latest Pitmans test is another feather to her cap.

Pitman Certificate for Kelsey Ling of Adams Harrison

Lease Renewals and Other Business Renewals in the Current Market

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With most commercial leases containing upwards only rent review clauses, the renewal of the lease is often the only opportunity available to a tenant to reduce the rent.

Unlike rent review clauses which are almost inevitably drafted on up an “upwards only” basis, a tenant who has a right to claim a new lease at the end of its contractual term, has a right to claim that the lease on the same terms as the existing lease except as to rent, which is to be a market rent.

The current state of the commercial property market means that many tenants are securing renewals at significantly reduced rents. How much a reduction will depend on the date of the last review, the location of the property and of course the relative bargaining skills of the landlord’s and the tenant’s surveyors instructed on the review.

When approaching a lease renewal, landlords and tenants should seek the advice of both their solicitors and surveyors at the earliest opportunity.

The landlord should consider whether it is in his interest to trigger renewal procedures or to leave these in the hands of the tenant and similarly the tenant will need to consider whether it should trigger renewal procedures or just let the lease continue. This decision is often difficult for a landlord who may have to consider whether he wants the security of income offered by a long lease, even if renewal means he suffers a substantial reduction in income.

The tenant will need to consider whether it is in his interest to commit himself to the costly process of renewing his lease or, particularly if he only has short term requirement to allow the lease to continue, albeit at an inflated rent.

When considering these issues, a tenant can be comforted by knowing that he is not committed to taking a new lease by either the landlord instigating or the tenant instigating the renewal procedures. On the other hand a landlord needs to be aware that if the tenant, who has a right to a new lease under the Landlord and Tenant Act 1954, requires such a new lease, then as long as that tenant meets all the statutory time limits he will obtain a new lease unless the landlord can prove one of the statute grounds of opposition.
If the landlord wishes to recover possession of premises and oppose the tenant’s claim to a new lease, the landlord should seek the early advice of his solicitor about the available grounds of opposition, and have the basis of his case prepared, before he triggers the renewal procedures.

At Adams Harrison we have had a considerable experience in advising both landlords and tenants on business lease renewals, both on a contested and an un-contested basis and if you require advice or guidance you should contact Rhodri Rees at Haverhill on [email protected] or Richard Booth at Saffron Walden on [email protected]

 

Inheritance Tax and The New Residential Allowance

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The Inheritance Tax Allowance is still currently £325,000.00 per person. However in April 2017 a new allowance was introduced called the Residential Nil Rate Band. This allowance is currently £125,000.00 per person reaching the maximum allowance of £175,000.00 by the tax year 2020/2021.

If an estate is left to a spouse or civil partner then there is no inheritance tax payable because of spouse exemption. Therefore the allowance can transfer to the surviving spouse’s estate. On the death of the surviving spouse/civil partner his or her estate will benefit from an allowance of £325,000.00 plus £175,000.00 (if the death is after 2020) plus the transferable nil rate band and the transferable residential nil rate band which were not previously used of the same amount. This will give a combined allowance of £1,000,000.00 before inheritance tax is payable.

There are certain criteria required to be eligible for the Residential Nil Rate Band Allowance and Tapering Relief for estates of a certain value

For more information please contact our private client department.

Love is in the air at the Sawston office

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Love is in the air at the Sawston office – two engagements in a matter of months:-

Paige Doran and Fiancé Aaron

Paige Doran and Fiancé Aaron

 

Paige Doran secretary to Lisa Thornhill got engaged on 27th December to fiancé Aaron in a surprise engagement on 27th December in Paris.

Cazz Rice and Fiancé Gary

Cazz Rice and Fiancé Gary

 

Cazz Rice, secretary to Rebecca Dedman got engaged to fiancé Gary on Tuesday 2nd April – again a complete surprise on their 2 year anniversary.

 

We wish them all the best for their future lives together