In June 2010 the Scottish Government commissioned this evaluation of its Low Cost Initiative for First Time Buyers ( LIFT) schemes. The aim of LIFT is to help people on low to moderate incomes to buy a home, where this is sustainable for them. The evaluation covers four of the LIFT schemes currently operated by the Scottish Government over the period 2005/06 to 2009/10. These are:
- Shared ownership
- GRO grant for owner occupation
- New Supply Shared Equity ( NSSE)
- Open Market Shared Equity Pilot ( OMSEP).
The evaluation involved:
- a desktop review of data collected by the Scottish Government;
- telephone interviews with 151 individuals who had purchased properties through the LIFT schemes; and
- stakeholder consultation, building on consultations previously undertaken by the Scottish Government.
The research findings were based on an analysis of the information gathered. The report makes a number of recommendations. These should be considered by the Scottish Government in its review of the support it provides to help people on low or moderate incomes to purchase a home.
Key Themes from the Research
Between 2005/06 and 2009/10, a total of 7,268 properties were provided through LIFT. Almost half (44%) were OMSEP properties, a third NSSE, and smaller proportions GRO (12%) and shared ownership (11%).
Meeting Household Needs
Reaching the Target Groups
LIFT has largely been successful at targeting the households identified as priorities for assistance through the schemes. OMSEP and NSSE have been most successful at targeting first time buyers. GRO and shared ownership schemes often had wider priorities to assist other groups or result in wider housing market changes, resulting in a reduced proportion of first time buyers being housed. For instance, GRO has been used to stimulate owner occupation in areas where there was not a well performing market.
Satisfaction with LIFT
OMSEP and NSSE have generally supported people into positive, sustainable housing situations. GRO is also meeting people's housing needs, with some concerns around build quality and sustainable neighbourhoods. Shared ownership does not appear to be meeting household needs in many cases, due to significant concerns over value for money for the purchaser.
Enabling Home Ownership
Quantitative data suggests that around half of NSSE and a quarter of OMSEP purchasers could have bought at the lower end of the open market. This contradicts qualitative interviews where few purchasers stated that they could have purchased on the open market. The need for a deposit could be a significant factor, as could local variations in ability to purchase and particular housing needs.
Meeting Long Term Housing Needs
Most OMSEP, NSSE and shared ownership purchasers see LIFT as a medium to long term housing solution. GRO purchasers appear more likely to consider moving on within the owner occupied sector in the short term.
Meeting Particular Housing Needs
OMSEP has significantly contributed to meeting particular housing needs of disabled people.
LIFT purchasers are experiencing many of the same barriers to mobility as other owners due to housing market conditions. However, the OMSEP and NSSE schemes have created conditions where some owners do not see it in their interest to consider other housing options due to the good value offered by their current circumstances.
The '20 year rules' are creating some concerns about long term security for OMSEP, NSSE and shared ownership purchasers.
Average purchaser prices and purchaser contributions were lower for OMSEP than NSSE properties, perhaps reflecting that the former include a far higher proportion of second hand and lower quality houses than new build NSSE properties. Most shared equity purchasers felt that their housing costs were affordable.
Over the past five years around 16 per cent of households housed through LIFT were local authority or RSL tenants. This will have freed up 1,130 homes for new lets. A further 18 per cent of people housed were not tenants but were on a social landlord's housing list, although only around an estimated one fifth of these believed they had a realistic chance of being housed by the landlord. Overall, approximately 21 per cent of LIFT purchasers (1,532 households) were living in social rented accommodation or likely to be offered it.
NSSE, GRO and shared ownership are resulting in new build properties, stimulating the construction industry and creating more owner occupied homes. The role that OMSEP plays is less clear. OMSEP does not add directly to housing supply but may stimulate a chain of sales and purchases which could include newly built housing.
OMSEP and NSSE appear to contribute significantly to quality of life for purchasers, resulting in wider social benefits.
Contributing to Mixed and Sustainable Communities
New supply LIFT has contributed to creating mixed communities. However, there is evidence of some tensions arising from tenure mix and integration.
Value for Money
On average GRO requires the lowest level of subsidy and shared ownership the highest. However, when receipts are taken into account, NSSE and OMSEP generally provide better value for money. OMSEP is a particularly cost effective option. While its upfront subsidy costs are around one third lower than NSSE, its long term costs are estimated to be around one half. However, the impact OMSEP is having on overall supply is less clear.
Data Recording and Monitoring
A recurring theme throughout the evaluation has been a lack of, or inconsistencies in the way LIFT schemes are being monitored.
The Scottish Government should:
1. Consider placing greater emphasis on geographical and purchaser targeting in LIFT schemes.
2. Require RSLs to provide a comparable level of protection to purchasers in LIFT schemes as is available to purchasers from NHBC registered developers.
3. Encourage RSLs and private developers to provide prospective purchasers of new supply property with more detailed information regarding their ongoing housing costs, particularly in relation to anticipated service charges.
4. Continue to promote the contribution OMSEP can make in meeting particular housing needs.
5. Put in place arrangements to pro-actively encourage purchasers to consider their options to acquire additional equity on a periodic basis.
6. Consider offering greater flexibility to the timescales and levels of additional equity NSSE and OMSEP purchasers can acquire.
7. Allow sharing owners to privately let their properties under strict conditions in situations where lack of demand for shared ownership in preventing mobility.
8. Consider introducing interest charges on its equity loan after a period of time.
9. Review the use of the 'golden share' in consultation with local authorities, and advise existing purchasers where it does not intend to exercise its right to repurchase a property.
10. Re-examine the golden share model to identify whether there would be value in replacing it with a right of pre-emption.
11. Ensure that prospective purchasers are provided with more prominent information regarding the applicability of the '20 year rules' and consider how to clarify the position for existing purchasers.
12. Undertake further work to assess the economic impact of OMSEP.
13. Encourage RSLs and private developers to draw on existing good practice examples and lessons learned elsewhere in the creation of mixed and sustainable communities.
14. Review the value of retaining three new supply LIFT schemes to support households into home ownership. Consideration should be given to discontinuing GRO and shared ownership.
15. Introduce guidance on the setting of occupancy charges should it decide to retain shared ownership.
16. Review and improve the way data is collected and collated in relation to LIFT schemes.