First-time buyers to be given more help with deposits
A pilot scheme aimed at helping first-time buyers afford the deposit on their new home has been launched.
The Scottish Government has opened applications for the First Home Fund, which has been designed to try to make the housing market fairer.
The scheme is open to all first-time buyers in Scotland and can be used to help buy both new-build and existing properties.
It will run from December 18 this year until March 2021 and will provide first-time buyers with up to ÂŁ25,000 to help them buy a property that meets their needs and is located in the area they want to live.
To take part in the scheme, buyers will need to provide a minimum deposit of around 5%, subject to individual lender requirements, and their mortgage must be at least 25% of the purchase price.
Although the Scottish Government will have an equity share in the property, the buyer will own the property outright, with no monthly payments to be made towards the Scottish Government and no interest charged.
Buyers will normally repay the Scottish Government's percentage equity share when they sell their home, however they can choose to pay it off earlier.
The maximum contribution from the Scottish Government will be ÂŁ25,000 or 49% of the property valuation figure or the purchase price - whichever is lower.
The Scottish Government has said the scheme will help up to 6,000 first-time buyers purchase their first home.
More than 32,000 households are estimated to have used existing Scottish Government shared equity schemes since 2007.
These include the Help to Buy scheme which assists both first-time buyers and home movers in purchasing a new-build home; the New Supply Shared Equity scheme, which allows people to buy a new-build property either from a housing association or a housing co-operative, and the Open Market Shared Equity scheme, which allows buyers to purchase a property for sale on the open market.
First Minister Nicola Sturgeon said removing barriers for new buyers is at the heart of the latest fund.
"For many people, getting a deposit together is often an obstacle in buying their first home,'' she said.
"Removing barriers and supporting people to buy the home they want is at the heart of this new fund.
"That is why we are acting to make the process fairer, to offer a helping hand to those buying a new home.''
She added: "The First Home Fund will provide first-time buyers with up to ÂŁ25,000 towards the cost of buying a home that meets their needs and is located in the area where they want to live.
"Since 2007, the Scottish Government has provided more than ÂŁ1.2 billion in shared equity schemes, which have helped tens of thousands of people into home ownership, particularly those aged under, 35 and this new scheme adds to the support we are providing.''
Nicola Barclay, chief executive of industry body Homes for Scotland, said: Home ownership remains the preferred choice of tenure for the majority of Scots.
"Though they can sustainably manage monthly mortgage payments, getting the deposit together remains a challenge for many.
"Initiatives such as this and Help to Buy are crucial, not only in helping people achieve their housing aspirations but also in helping to relieve pressures on the social and private-rented sectors.''
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