My boyfriend owns a caravan – can he still use a lifetime Isa to buy a home?

Q My boyfriend and I are thinking of buying a house in the future. I have therefore opened a lifetime Isa so I can benefit from the first-time buyer bonus that comes with it.

My boyfriend, however, owns a holiday caravan. It’s non-residential as it is on a park that’s only open for a season and not the entire year, and there’s a maximum 28-consecutive-day stay policy.

Does he still qualify as a first-time buyer and, if so, can he also open a lifetime Isa? According to HMRC, you are disqualified if you have “freehold or leasehold interest of a residential property”.

I read somewhere that owning a park home means someone cannot be a first-time buyer, but I assume that is residential. Other than that I haven’t been able to find any information on this matter online. CS

A You don’t have to be a prospective first-time buyer to qualify for the government bonus of up to £1,000 a year that comes with a lifetime Isa in which you can save up to £4,000 a year. But you do need to be aged 18 or over, under 40 and resident in the UK (unless you are a crown servant or married to one). However, to use your Isa savings – including the government bonus – towards property purchase (rather than for your retirement from the age of 60) you must be a first-time buyer.

And you are right that you are not deemed to be a first-time buyer if you have ever owned any interest in land anywhere in the world that is freehold, leasehold (where the lease was longer than 21 years) or commonhold. In addition, the “interest in land” must not comprise “a building that is used – or suitable for use – as a dwelling”, which includes holiday homes even if they cannot be used all year round.

Whether your boyfriend counts as a first-time buyer will depend on the agreement drawn up with the caravan park regarding the land on which it sits. If his agreement gave him “exclusive occupation” of a particular area for more than 21 years, he will own the land as leasehold and so his ownership of the caravan would stop him being a first-time buyer of other property. However, if his agreement with the park contains a provision that the caravan can be moved to an alternative pitch at the site at the park owner’s request and/or gives the park owner free access to the land, it makes the agreement a licence to occupy the land rather than a leasehold.

If it is a licence, it doesn’t affect your boyfriend’s ability to say he is a first-time buyer despite having a caravan. So he would be able to use savings from a lifetime Isa to put towards the property purchase without paying a penalty to withdraw funds before the age of 60.

What neither you nor your boyfriend can do is use savings in a lifetime Isa to buy a caravan, other type of mobile home or houseboat as they do not “provide a legal interest in land”.