The Cabinet Secretary for Social Justice, Communities and Pensioners’ Rights, Mr Neil, launched the Help to Buy (Scotland) Affordable New Build and Help to Buy (Scotland) Smaller Developers schemes on 21 January 2016.
The scheme will be open to buyers from 1 March 2016 onwards. No application forms can be submitted until that date and please note the Scottish Government do not issue application forms, these will be made available from the appropriate administering agent.
What is the Help to Buy (Scotland) Affordable New Build Scheme?
The Help to Buy (Scotland) Affordable New Build Schemes comprise two schemes which help buyers who would not otherwise be able to do so to buy an affordable new build home from a participating home builder.
The main Help to Buy (Scotland) Affordable New Build Scheme is available to larger homebuilders while the Help to Buy (Scotland) Smaller Developers New Build Scheme is available to smaller home builders.
The rules to both schemes are identical and the agents administering the schemes will identify which scheme your application is to be processed under. Here's a short summary of how the Help to Buy (Scotland) Affordable New Build schemes work:
- the schemes are only available on new build homes from participating home builders and on homes up to a maximum value of £230,000 for purchases which complete on or before 31 March 2017, £200,000 for purchases on or before 31 March 2018, and £175,000 for purchases on or before 31 March 2019 (see important information below on the threshold prices)
- your mortgage lender is likely to require you to contribute a deposit of around 5%, your mortgage and deposit must cover a combined minimum 85% 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 up to a maximum 15% 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 100% of the purchase price through a combination of available mortgage and deposit your application will not be eligible;
- 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) Affordable New Build schemes, please contact them to check what their lending criteria is.
If you are interested in the scheme, what should you do?
Important Information on the Threshold Prices for the Scheme
The threshold prices for the scheme are £230,000 for purchases which complete on or before 31st March 2017, £200,000 for purchases on or before 31st March 2018, and £175,000 for purchases on or before 31st March 2019 (see important information below on the threshold prices)
This means that if an application is submitted to the scheme and the expected settlement date is after 31st March in that year (and it is therefore in the next financial year), the maximum threshold price for the year in which the transaction will actually complete will apply.
For example – In November 2016, an application form is submitted to the scheme with a proposed settlement date of May 2017. The maximum threshold price of £200,000 will apply to that application.