Fresh help for house buyers

18th May 2013

People across Scotland are to be helped on to the housing ladder with a £120 million funding boost announced today by Deputy First Minister Nicola Sturgeon.

The funding will be available over the next two years to both first time buyers and existing homes owners who are buying a new build home.

Buyers who successfully apply to use shared equity will be able to purchase a home by paying a majority share in it, while the Scottish Government pays the remaining amount under an agreement with the buyer.

As well as helping house buyers the scheme will stimulate the construction industry, creating growth within the house building sector.

The Scottish Government is currently working with stakeholders to develop the scheme.

Speaking at the Homes for Scotland Annual Conference, Deputy First Minister Nicola Sturgeon said:

“People in Scotland who should rightly be able to afford a mortgage are still facing real challenges buying a home.

“We are well aware of the challenges that people face and want to continue to do all we can to help. The £120 million funding announced today will not only help people to buy their first home, they will also help ‘second-steppers’ to be able to sell their home and to move to another property.

“But this is not only about helping people to buy houses. Our actions are also stimulating the economy. By supporting house buying and construction, we are creating new work for the sector and supporting jobs.

“This demonstrates that in these tough financial times the Scottish Government will step in, both to help households and crucial sectors of our economy like house building.”

Jim Preston, the new Chairman of trade body Homes for Scotland, welcomed the news. He said:"Home building is one of the most effective ways to stimulate the economy because of its strong employment and output multiplier effects.

“With strong evidence to demonstrate the significant positive impact shared equity schemes can make, a well-designed and funded initiative could be a game changer in Scotland.

"Timing, however, is crucial and we therefore look forward to working closely with the Scottish Government to ensure this option is made available to help home buyers here without delay."

Paul Smee, Council of Mortgage Lenders Director General added:"We welcome and support the Scottish Government's efforts to stimulate the house-building sector and we look forward to working constructively with the government to help deliver this scheme."

The £120 million is part of an additional £290.8 million of restricted loan and equity investment funding falling from the recent UK Budget. This is not additional capital grant to the Scottish Government but is additional loan fund money that will have to be repaid.

Shared equity is a way to buy a home without having to fund all of it. When an individual buys a shared equity home from a housing association or on the open market they pay for the majority share in it and the Scottish Government pays the rest under an agreement which it enters into with the buyer.

Current Scottish Government Equity support schemes

The Scottish Government already provides support for shared equity programmes through the Low-cost Initiative for First Time Buyers (LIFT), which brings together several ways to help households access home ownership. These include:

The New Supply Shared Equity scheme to allow first time buyers to buy a new build property either from a housing association or a private developer.
The New Supply Shared Equity with Developers scheme which allows first time buyers to buy a new build property from a developer.
The Open Market Shared Equity scheme which allows first time buyers to buy a property on the open market.