The Scottish Government is committed to supporting home ownership in a balanced and sustainable way by helping people on low to moderate incomes to become home owners, where that is affordable for them.
Its Low-cost Initiative for First Time Buyers (LIFT) 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. Information on the two private developer schemes can be found in the web links below:
What is shared equity?
Shared equity is a way to buy a home without having to fund all of it. When you buy a shared equity home from a housing association or on the open market you pay for the majority share in it and the Scottish Government pays the rest under an agreement which it enters into with you. You own the home outright, but the Scottish Government holds a security over the proportion of it has funded. When you later sell your home (or earlier if you want to increase your stake), the Government will receive the value at the time of sale of the percentage equity stake funded. If, for example, the Government funds 30 per cent of the purchase price, when the property is sold 30 per cent of the sale value of the property will be returned to the Scottish Government.
When you buy a LIFT shared equity home from a private housebuilder, you also own the home outright, but the Government and the private housebuilder will jointly fund an interest-free equity loan for you and each hold a security over the proportion of your home they have funded. When you sell your home (or earlier if you want to increase your stake), the Government and the private housebuilder will each receive the value at the time of sale of the percentage equity stake funded. If, for example, the Government and the private housebuilder each fund 15 per cent of the purchase price, when the property is sold the government and the housebuilder will each receive 15 per cent of the sales value of the property.
Independent evaluation of the LIFT schemes
In 2011, ODS consulting carried out an independent evaluation of the LIFT schemes on behalf of the Scottish Government. The Scottish Government has set out its response and the action it has taken to the evaluation findings and ODS's recommendations. The evaluation found that the LIFT shared equity schemes have been successful in offering people on low to moderate incomes an affordable way of owning their own home.
Following on from the LIFT evaluation, the Scottish Government will focus the available funding for LIFT on the shared equity schemes as these offer best value for money for taxpayers and they are most affordable for buyers. The Scottish Government does not plan to continue providing funding to support the shared ownership scheme or to use GRO grants to allow first time buyers to buy a home at below market value. There will still be some shared ownership homes available where these homes are already in the process of being built, but no new homes will be taken forward.
After Sale Shared Equity Procedures (ASSEP)
The Scottish Government has prepared After Sales Shared Equity Procedures for use by registered social landlords to assist them with any post sale queries from shared equity owners. The document contains sample emails and correspondence to be used for situations including when a property is remortgaged, when a person wishes to purchase additional equity, and when a person wishes to add or remove a person from shared equity documentation. A copy of the ASSEP is located here.