Open Market Shared Equity Scheme (OMSE): equality impact assessment

Key Findings

The EQIA undertaken for the policy change to OMSE identified positive outcomes for equalities groups, with a greater impact on some groups than others. There were also some negative impacts identified for some groups.

Age

The EQIA identified positive impacts of OMSE on people based on age. OMSE supports home ownership across the whole of Scotland for those in one of the priority access groups which includes the over 60s.

We identified that obtaining a mortgage may be more difficult for the over 60s and act as a barrier to accessing OMSE. Therefore, we removed the requirement to have a mortgage for the over 60s priority group. Instead proceeds from a house sale, savings or a combination of both can be used to pay for their equity share. This helps increase the opportunities for older people to buy a property which suits their needs.

However, our evidence also showed that most first time buyers in Scotland and across our shared equity schemes are 35 and under. The removal of first time buyers from the OMSE scheme may affect the under 35s ability to purchase their first home. Although as part of our Low Cost Initiative for First Time Buyers Scheme (LIFT) the Scottish Government also operates the New Supply Shared Equity Scheme (NSSE) which is available to all first time buyers.

First time buyers who are a member of one of the priority access groups will be able to access the OMSE scheme.

Disability

The EQIA identified a negative impact of OMSE on people based on disability. Some disabled applicants may find it difficult to find a property suitable to their needs due to the threshold prices. There are different threshold prices across Scotland and are set by apartment size. For urban areas, the thresholds are set at the lowest 25% of house prices which means that 25% of the homes sold in the threshold area will be at or below that price. For rural areas the middle (median) house price is used instead to ensure there is enough available properties within commuting distance.

This evidence based approach ensures that the scheme continues to be targeted at those who need help to access the affordable housing market and to ensure that, across Scotland, all areas are able to benefit from a viable scheme with a reasonable number of purchases.

Some disabled applicants would identify a property which would suit their needs however the asking price was higher than the threshold would allow. We listened to feedback from disabled applicants who found it difficult to find a suitable property as the threshold prices were too restrictive. In 2022 we made a change which allowed OMSE applicants to make offers on properties above the formal valuation amount. This was allowed under the First Home Fund (FHF) and Ministers interests are protected by the buyer paying any £ amount over valuation from their own funds, with Ministers % equity stake still based on no more than formal valuation.

OMSE remained as an affordable housing scheme as applicants needed to show they could not afford to buy without the equity stake. This change allowed applicants to OMSE to be able to compete on a more level playing field with other buyers in the Scottish offers over system market.

Sex

The EQIA identified a negative impact of OMSE on people based on sex. Lone parents may become ineligible for the support as a result of first-time buyers becoming ineligible. On average lone parents have lower incomes than dual parent households which may make it more difficult for them to access home ownership. Lone-parent families makeup 25% of families across Scotland, and 92% of lone-parent families are headed by women.

Although they will still be eligible to apply for NSSE which is available to all first time buyers. NSSE is also available to those who have previously owned a home and have experienced a significant change in circumstances – for example, a marital breakdown.

However, there are positive impacts based on sex as OMSE helps people access affordable home ownership all across Scotland. Evidence from our OMSE Characteristics of Buyers Reports show that in 2020/21 OMSE purchases involving one named buyer, 60% of purchasers were female and 40% were male and for purchases involving two named buyers the split of purchasers was 50% female and 50% male. Therefore, there is currently not a difference between the sexes ability to access the scheme.

Pregnancy and Maternity

The EQIA identified that there will be minimal impact on people based on pregnancy and maternity. Any impact will be positive, arising from an increase in ability for people to own their own home in a way that is affordable for them to do so. There was limited evidence available and this is not something that is recorded in the OMSE sales log form.

Gender Reassignment

The EQIA identified that there will be minimal impact on individuals based on gender reassignment. Any impact will be positive, arising from an increase in ability for people to own their own home in a way that is affordable for them to do so. There was limited evidence available and this is not something that is recorded in the OMSE sales log form.

Sexual Orientation

The EQIA identified that there will be minimal impact on individuals based on sexual orientation. Any impact will be positive, arising from an increase in ability for people to own their own home in a way that is affordable for them to do so. There was limited evidence available and this is not something that is recorded in the OMSE sales log form.

Race

The EQIA identified that there will be some positive impact on individuals based on race. Any increase in ability to own affordable housing is likely to have a positive effect on people who would otherwise struggle to meet their housing needs. Ethnic minorities often struggle to meet their housing needs and often face discrimination in the private sector. Ethnic minorities are more likely to experience poverty and to be in less secure, lower paid work.

One negative impact OMSE may have is that some ethnic minorities have higher rates of inter-generational living and extended families living in one household. Due to this they may require larger homes which may not be available through affordable housing means and may rely on more expensive, less reliable private rented housing.

OMSE has maximum threshold prices which applicants must stick to. There are different threshold prices across Scotland and they are set by apartment size. Apartment sizes go up to a size 6 which would be a living room and 5 bedrooms which would help a larger family.

However, in 2022 we made a change which allowed OMSE applicants to make offers on properties above the formal valuation amount. This was allowed under the First Home Fund (FHF) and Ministers interests are protected by the buyer paying any £ amount over valuation from their own funds, with Ministers % equity stake still based on no more than formal valuation.

OMSE remained as an affordable housing scheme as applicants needed to show they could not afford to buy without the equity stake. This change allowed applicants to OMSE to be able to compete on a more level playing field with other buyers in the Scottish offers over system market.

Religion or Belief

The EQIA identified that there will be minimal impact on individuals based on religion or belief. Any impact will be positive, arising from an increase in ability for people to own their own home in a way that is affordable for them to do so.

There may be a negative impact on Muslims as we know Muslims can find it more difficult to buy a home if they want to ensure that their purchase is Shariah-compliant (i.e. does not involve the payment of interest on a mortgage). There is currently only one lender (the United National Bank), which offers a Shariah-compliant home purchase plan in Scotland. However, this is not a scheme specific issue.