Alexis was saving for her first home, but she didn’t expect to pay a charge when she withdrew her Lifetime ISA money.
What happened
Alexis had opened a Lifetime ISA so she could save to buy her first home. Less than a year later, she found the property she wanted to buy, so decided to withdraw her money.
Alexis was told she would lose her government bonus as the Lifetime ISA had been open less than 12 months. Any withdrawal would therefore incur a charge. Alexis didn’t think this had been made clear to her when she opened the account.
Alexis was buying the property on a shared-ownership basis. She asked if she could wait and use the money from the Lifetime ISA to purchase a further share of the property later. But the provider said this option wasn’t possible.
Alexis’s provider explained that if Alexis bought an initial share in the property, it would give her a legal interest in the property. This would mean in the future she wouldn’t meet the definition of a first-time buyer.
Alexis wasn’t happy with this decision, so she brought her complaint to us.
What we said
We looked at both sides of the story. We understand that there are quite complex rules governing Lifetime ISAs, but we found that the provider had interpreted and explained them clearly. It had explained how the withdrawal charge would work to Alexis when she opened the account.
We accepted that the provider hadn’t highlighted the issue of buying a future share in the property. But we could see that it had done enough to outline all the basic rules about the Lifetime ISA at the start.
We didn’t think the provider could foresee all the possible outcomes with Alexis’s account. So, it wouldn’t have looked at this particular issue when she opened the account. We did not uphold Alexis’ complaint.