The Scottish Government supports a number of different schemes to help first time buyers with low or moderate incomes to access home ownership. The most common options are described below, but for more detailed information on the different schemes that are available in your area and to fit your circumstances, you should contact your local council.
Shared Equity
Shared equity homes are available from housing associations or private developers through the open market. It allows you to buy a home without having to fund all of the purchase price.
If you buy a shared equity home, you will pay for a majority share in the home and the Scottish Government will pay for the rest. You can increase your share in the home while you are living there or, if you decide to sell the home, you will need to pay back the proportion that was funded by the Scottish Government. For example, if the Scottish Government provided 30% of the purchase price when you bought the home, you will need to pay back 30% of the sale value when you sell the home.
You will be responsible for all repairs and maintenance costs.
For more help and information about shared equity you should contact your local council or visit the Scottish Government website.
Shared Ownership
Shared ownership homes are available from some housing associations. This scheme allows you to buy a share in a flat or house that is owned by the housing association. You will have to pay some rent, or an ‘occupancy charge’ for the proportion that is owned by the housing association.
If you enter into shared ownership, you will have to buy an initial share of 25%, 50% or 75%. You can decide to increase your share at a later date or you can sell the property. If you decide to sell, the housing association which owns remaining share of the home will usually have a pre-emption right to buy the home back from you.
You will be responsible for all repairs and maintenance costs.
For more help and information about shared ownership, contact your local council or visit the Scottish Government website.
Case study
Citypark Way –(courtesy of Link Group)
When Will MacKenzie began exploring the idea of buying his own home, he decided to visit a financial advisor to discuss his options for purchasing a property in Edinburgh. With Edinburgh’s house prices continuously on the rise, the only properties Will was seemingly able to afford in Edinburgh were poor quality or in undesirable areas.
After looking for the perfect home for some time to no avail, Will’s financial advisor recommended the New Supply Shared Equity (NSSE) scheme as the best option, given his circumstances. The financial advisor explained the main benefit of buying a New Supply Shared Equity property: that you generally only have to pay between 60% and 80% of the property price, with the Scottish Government funding the shortfall. As a result, the mortgage you have to borrow is smaller, meaning the deposit and monthly payments are likely to be more affordable. The numerous financial benefits of NSSE drew Will to the scheme:
“I was able to buy the property at the market rate, rather than having to bid, and ultimately pay, far above the market value, such is the case in the Edinburgh private sales market.”
Fortunately for Will, Link Group had opened applications for their new housing development at Citypark Way in Edinburgh. This development was offering clients the opportunity to purchase a brand new, two-bedroom property in a desirable area in the north of Edinburgh. Will did not want to miss out on this opportunity, so quickly completed the online application before the closing date and eagerly awaited the news he had been hoping for. Fortunately, Will’s application was successful, and he was offered one of his preferred plots.
After a few months of waiting for his new home to be complete, the day finally arrived when Will was able to collect the keys and move in. Will said:
“My New Supply Shared Equity scheme property is much more suited to my needs than any property that I would have been able to afford on the private market.
Not only is the quality incredible, but I was able to purchase a flat with a second bedroom, which will allow me to grow into the flat when I look to start a family in the future.
Furthermore, the location of my development is perfect for my situation.”
Will is delighted with his new build property and would recommend NSSE to anyone in a similar position as he was before he purchased his home through the scheme. Will said:
“I would (and already have) recommended the New Supply Shared Equity Scheme to friends. I think it’s a fantastic support for buyers of my income level, and a great opportunity to buy high quality accommodation fairly.”