A strong and growing house-building industry is key to Scotland's future economic prosperity.
The Scottish Government is supporting home ownership by helping people to become homeowners where it is affordable for them over the long term.
The Help to Buy (Scotland) scheme aims to help stimulate Scotland's house-building industry and to help people to buy a new build home in Scotland from a home builder who has been approved to participate in the scheme.
On 27 September 2013 the Deputy First Minister Nicola Sturgeon announced funding for the scheme of £220m over three years. This was increased in May 2014 to £275m. On 12 January 2015 the First Minister, announced a further £30m for Small Developers; the revised budget is allocated as follows:
- £35m for financial year 2013-14
- £140m for financial year 2014-15
- £130m for financial year 2015-16
The Help to Buy (Scotland) scheme is a demand-led scheme and its budget for 2015-16 is £130 million (£30 million of this funding is ring-fenced for small developers) and will be allocated to transactions due to conclude from 1 April 2015 – 31 March 2016.
What is Help to Buy (Scotland)?
The Help to Buy (Scotland) scheme helps buyers to buy a new build home from a participating home builder without having to fund all of the purchase price.
Here's a short summary of how the Help to Buy (Scotland) scheme works:
- the scheme is only available on new build homes from participating home builders and on homes up to a maximum value of £250,000;
- your mortgage lender is likely to require you to contribute a deposit of around 5%, your mortgage and deposit must cover a combined minimum 80% of the total purchase price.
- your mortgage from one of the participating lenders must be a repayment mortgage, of at least 25%, and cannot be an interest-only first mortgage;
- the Scottish Government will help buyers to purchase the property by taking an equity stake of between 10% and 20% of the value of the property;
- no annual interest is charge on your equity stake;
- the Scottish Government’s equity stake can be repaid at any time and is based on the value of the property at the time of the repayment;
- the scheme is only available to those who are unable to afford to purchase the property without the Government purchasing an equity share in the property, i.e. if you are able to afford over 90% of the purchase price through a combination of available mortgage and deposit, your application is likely to fall;
- the scheme is not available to a single person who requires a mortgage of more than 4.5 times their income or couples that require a mortgage of more than 3.5 times their joint income; and
- there are currently eight participating lenders offering mortgages for the Help to Buy (Scotland) scheme, please contact them to check what their lending criteria is for the Help to Buy (Scotland) scheme.
If you are interested in the scheme, what should you do?
- read the information leaflet for buyers which will provide you with vital information on how the scheme operates;
- in the first instance you will need to search for Help to Buy properties that are for sale by a participating home builder. The properties may be marketed for sale on estate agents’ websites, home builder’s websites, in local newspapers, or on the radio;
- contact the home builder for further details and to arrange viewings;
- speak to an Independent Financial Advisor or a participating lender before you submit an application form to one of the agents administering the scheme on behalf of the Scottish Government;
- you should not submit a full mortgage application until you have received an 'Authority to Proceed’ from one of the administering agents informing you that your application is eligible to participate in the scheme;
- the scheme is a demand-led scheme and once its budget is fully allocated no further applications can be considered;
- you can apply up to 9 months in advance of the anticipated completion date; and
- please apply at least three months in advance of the completion date to allow the necessary legal paperwork to be completed.
After Sale Shared Equity Procedure
The Scottish Government has prepared After Sales Shared Equity Procedures to help 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 re-mortgaged, when a person wishes to purchase additional equity, and when a person wishes to add or remove a person from a shared equity documentation.
The Scottish Government has also prepared a Post Sale Booklet for Buyers which covers the most commonly asked questions relating to any post-sale situation or queries.