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New Supply Shared Equity (NSSE) scheme: administrative procedures

Operational guidance for registered social landlords and local authorities.


Annexe G

Financial reconciliation - equity stake increases

This example shows what would happen if an owner in a Type 1 project decides to increase the equity stake in their property from 65 per cent to 85 per cent and then from 85 per cent to 95 per cent and then from 95 per cent to 100 per cent. There is no golden share over the property.

£

Open market valuation (1 year after the owner has taken entry of the property

130,000

Owner’s equity stake (65 per cent of £130,000)

84,500

The Scottish Ministers’ equity stake (35 per cent of £130,000)

45,500

Owner then increases their equity stake to 85 per cent:

Owner’s new equity stake (85 per cent of £130,000)

110,500

Owner’s receipt to the Scottish Ministers (£110,500 - £84,500)

26,000

The Scottish Ministers’ equity stake decreases to 15 per cent:

The Scottish Ministers’ new equity stake (15 per cent of £130,000)

19,500

Registered social landlord pays the receipt to the Scottish Ministers

26,000

Open market valuation (3 years after the initial purchase)

140,000

Owner’s equity stake (85 per cent of £140,000)

119,000

The Scottish Ministers’ equity stake (15 per cent of £140,000)

21,000

Owner then increases their equity stake to 95 per cent:

Owner’s new equity stake (95 per cent of £140,000)

133,000

Owner’s receipt to the Scottish Ministers (£140,000 - £119,000)

21,000

The Scottish Ministers’ equity stake decreases to 5 per cent:

The Scottish Ministers’ new equity stake (5 per cent of £140,000)

7,000

Registered social landlord pays the receipt to the Scottish Ministers:

21,000

Open market valuation (4 years after the initial purchase)

142,000

Owner’s equity stake (95 per cent of £142,000)

134,900

The Scottish Ministers’ equity stake (5 per cent of £142,000)

7,100

Owner then increases their equity stake to 100 per cent:

Owner’s new equity stake (100 per cent of £142,000)

142,000

Owner’s receipt to the Scottish Ministers (£142,000 - £134,900)

7,100

Registered social landlord pays the receipt to the Scottish Ministers:

7,100

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