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£60 million to help first time buyers
19/10/2008
A £60 million support package extended to help first time buyers across Scotland find affordable homes has been announced by First Minister Alex Salmond today.
The Open Market Shared Equity Pilot, announced in January this year, was a £24 million programme in 2008/09 covering 10 local authorities.
The scheme will be extended to the whole of Scotland, and in 2009/10 will have a substantially increased budget of £60 million - reflecting another example of the Scottish Government bringing forward its capital spending programmes and helping families during difficult economic times.
The scheme follows the Scottish Government's decision to bring forward up to £100 million this year and next to help meet the demand for affordable housing.
It will assist around 1,500 households on low incomes who want to buy, while helping people who are struggling to sell their properties by stimulating sales of properties in local housing markets.
The First Minister said:
"Last week, the Scottish Government announced a six-point programme to help Scotland's businesses and families during these tough economic times, and we are delivering.
"The six-point programme follows previous steps taken by the Scottish Government to help households and the economy, such as cutting business rates, restoring free education, and the phased abolition of prescription charges. And in August, in partnership with local government, I announced the acceleration of up to £100 million investment in affordable housing.
"Today, we can go further. I am announcing an extension to the Open Market Shared Equity Pilot to offer first time buyers across Scotland the opportunity to own a home on a more affordable basis, only paying for part of it. The £60 million will enable Government to fund the remainder as an interest-free equity stake.
"In these difficult economic times, we are doing all we can to help families, households and businesses. Providing more access to affordable housing and greater support to first time buyers will also help stimulate our housing market.
"However, this Government will not stop there. We will continue to pursue the claim for the £1 billion due Scotland from the Treasury - including our own Fossil Fuel Levy and underspend - to help fund a programme to reflate Scotland's economy and get us up and out of the downturn."
The Open Market Shared Equity Pilot (OMSEP) is part of the Scottish Government's Low-cost Initiative for First Time Buyers (LIFT), to help people on low incomes buy an affordable home where that is sustainable for them. Buyers are normally expected to take an equity stake of between 60 and 80 per cent of the value of a home, with the Government's equity stake being used to pay for the rest. The scheme can help first time buyers to access the market even where they do not have a large deposit available as the Government's equity stake can effectively be treated as a deposit by many lenders.
The temporary expansion of the OMSEP will be funded from the budget for LIFT within the Affordable Housing Investment Programme. In June, the Cabinet Secretary for Health and Wellbeing Nicola Sturgeon announced that the Scottish Government will spend £250 million on supporting first time buyers through LIFT from 2008 to 2011.
OMSEP is already available in ten local authority areas - Aberdeen City, Aberdeenshire, The City of Edinburgh, East Lothian, Highland, Midlothian, Moray, Perth & Kinross, Stirling and West Lothian. It is expected that the scheme will be ready to take applications in the rest of Scotland from early in 2009. The scheme will be made available across Scotland for a one year period; its geographic coverage will be reviewed after that time.
There is no annual charge to buyers on the Government's equity stake. The stake is paid back when the property is sold, with the Government receiving its proportion of the sales price at the time of sale.
The First Minister announced a six point plan in the wake of the Economic Cabinet on October 14, 2008 to boost the economy:
Actions to encourage development and investment
- re-shaping our capital expenditure
- intensifying our activity and support for Homecoming 2009, to boost tourism
- ensuring all government activity, including on planning and regulation, supports economic development
Actions to help individuals and businesses:
- intensifying our work around energy efficiency and fuel poverty
- increasing advice to businesses and individuals
- improving financial advice to vulnerable individuals