Fair Rents (Scotland) Bill or Artificial state manipulation of free market rent?10:34 AM, 6th November 2020
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Last week the Scottish Government launched The First Home Fund. This is a £150 million shared equity pilot scheme that will provide first-time buyers with up to £25,000 to help them buy a property.
The scheme is open to all first-time buyers in Scotland and can be used to help buy new build and existing properties. A first-time buyer is defined as anyone who does not own, or has previously owned, a property in Scotland or anywhere else in the world.
The funding provided by the scheme will help up to 6,000 first-time buyers purchase their first home.
In order to take part in the scheme, buyers will be required to provide a minimum deposit of around 5% (subject to individual lender requirements) and the mortgage must be at least 25% of the purchase price. Although the Scottish Government will have an equity share in the property, the buyer will own the property outright. There are no monthly payments to be made to the Scottish Government and no interest will be charged.
The buyer will normally repay the Scottish Government’s percentage equity share when they sell their home, however they can choose to pay this off earlier. The buyer can also choose to increase their equity share over time.
Buying through a shared equity scheme means the buyer splits the cost of purchasing the property with the Scottish Government. The buyer will fund their share through a deposit and a mortgage, with the remaining share being provided by the Scottish Government.
The buyer’s mortgage must be capital repayment. The property must be the sole residence of all applicants. Buyers will be able to use a Help to Buy: ISA or Lifetime ISA to go towards their deposit.
Buyers must submit their application before missives are concluded in order to be considered for support from the First Home Fund.
A fee of £550 will be charged and collected by the Administering Agent once they receive an application. This will be refunded if the application fails at any time, except in cases where there has been misrepresentation or fraud on the part of the buyer.
Below is an example of how the scheme works:
Purchase Price £125,000
Mortgage and Deposit £100,000
Scottish Government First Home Fund £25,000
In this case, the Scottish Government will have a 20% stake.
If the house is sold in a few years time for £140,000, the Scottish Government will be entitled to £28,000 from the sale proceeds.
More information about the scheme can be found at:
Applications are to be submitted to Link Housing at:
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