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Increasing supply of affordable homes
23/11/2009
The Scottish Government, teaming up with the house building industry, is to test a new way of increasing the supply of affordable homes to buy through its new Supply Shared Equity Scheme.
Developers are being asked to take equity stakes jointly with the Scottish Government in unsold or partially built private stock.
A buyer's stake will be 60-80 per cent, with the remainder of the purchase price split equally between the Scottish Government and the developer.
The scheme aims to help more people, who could not otherwise afford to do so, purchase their own home.
Housing and Communities Minister Alex Neil said:
"As part of this Government's economic recovery plan we want to help ensure house building can continue in the current economic climate to increase the supply of affordable homes.
"This trial scheme, if successful, could double the number of affordable homes we can support from the public funds available for this type of shared equity housing.
"We are keen to offer more opportunities to help people on low to moderate incomes meet their aspirations to become home owners, where it is sustainable for them."
Jonathan Fair, Chief Executive of industry body Homes for Scotland, said:
"Successful outcomes from the pilot scheme being announced today will pave the way for a sustained initiative specifically designed to encourage consumer activity and reinforce confidence in new home purchases.
"Homes for Scotland member companies are therefore fully committed to making this pilot a success, helping to deliver key policy objectives that support both the people and communities in which we all live.
"It is encouraging to see that Scottish Government continues to remain attuned to the importance of a healthy and vibrant private home building sector across the whole of Scotland."
Council of Mortgage Lenders policy consultant Kennedy Foster said:
"This product helps those who have not managed to build up a big savings pot make the most of what they have got to get onto the housing ladder. At the same time it helps the house building industry get back on its feet.
"We therefore welcome the expansion of the Low-Cost Initiative for First Time Buyers to include this product."
A call for bids from developers will be launched on November 23. If successful, the developer will market the homes under the new shared equity trial. Successful bids will be selected, in consultation with local authorities, by spring 2010.
This New Supply Shared Equity (NSSE) scheme would be part of the existing Low-cost Initiative for First Time buyers.
When the owner decides to sell their home, the Government and developer will receive the value at the time of sale of the percentage equity stake funded.
Properties available through the scheme will be entry level homes for first time buyers so would not normally be expected to exceed an upper price limit of £140,000 per unit (except where agreed for larger family properties).
Homes for Scotland members provide 95 per cent of new homes built for sale in Scotland.