OPEN MARKET SHARED EQUITY PILOT
UPDATE ON THE SCHEME FOR PROPERTY PROFESSIONALS
Introduction
On 31 March, the Open Market Shared Equity Pilot (OMSEP) was expanded across Scotland. OMSEP forms part of the Scottish Government's wider Low-cost Initiative for First Time Buyers (LIFT). The OMSEP scheme has a substantially increased budget of £60 million for 2009-10 and is expected to help up to 1500 households to access home ownership this financial year.
The Scottish Government is doing what it can, within its available powers, to help support economic recovery. This includes pursuing a range of measures, including the expansion of OMSEP, to help support the housing market in the current economic climate. However, given that resources are constrained, we need to target these measures carefully to help people in housing need.
This note provides an update for property professionals, such as estate agents and Independent Financial Advisers, who may be advising clients to apply for the OMSEP scheme. The scheme is proving extremely popular and in some areas it has attracted a very high demand. In addition, the Registered Social Landlords (RSLs) running the scheme have noted that some of the buyers applying are not eligible.
The note is therefore designed to help avoid the encouragement of buyers to apply where they are not eligible and, in areas of high demand, help you to identify buyers who are likely to get priority access to the scheme - we hope that this will help minimise any disappointment for applicants. However, if you are in any doubt about whether or not someone is eligible, please contact the relevant RSL for advice (contact details are included at the end of this note). Further information on the scheme and how it operates is available.
Eligibility
The scheme is primarily open to people on low to moderate incomes to help meet their aspirations to become homeowners. It can also be open to others as well, such as people with a disability whose current home does not meet their needs or people whose household circumstances have changed e.g. they have separated/divorced from a partner and cannot afford to buy a home on their own. In all cases, properties bought through OMSEP must be the buyer's only home.
There are no fixed maximum income levels below which people are eligible, but eligibility is based on the level of mortgage buyers can secure and afford. If the buyer(s) could afford a mortgage for more than 80% of the maximum price ceiling of the size of property they would be looking for then they will not be eligible for the scheme - details of current price ceilings are available on the Scottish Government (SG) website. Obviously the level of mortgage offered by lenders will depend on expenditure commitments as well as income, but, as a rule of thumb, RSLs will expect single buyers to borrow 3 times their household income and couples to borrow 2.5 times their joint income. Buyers can borrow more than that if they wish, but they must demonstrate that they have sought advice from an Independent Financial Adviser to be comfortable that they can afford the potential costs over the long term.
Priority Groups
The following groups of people get priority access to the scheme as long as they meet the eligibility criteria set out above:
- Social renters - people who are currently a tenant of either the Council or an RSL;
- Serving members of the armed forces;
- Veterans who have left the armed forces within the past year and wish to buy a home.
This means that where there is high demand, these applicants will still be able to get passports for OMSEP, even if a reserve list is in place.
Update on availability in different geographical areas
There are still passports available across the country for buyers in the priority groups listed above. However, in the following administrative areas there has been high demand from buyers:
- Highland
- Grampian
- Edinburgh and the Lothians, Borders and Fife
- Tayside and Forth Valley
- West of Scotland
In these high demand areas, there is both a high number of sales that have already taken place and a high number of buyers who have received 'passports' for the scheme and are currently looking for a property. In order to ensure a fair spread of purchases across Scotland, in these areas new application forms are no longer being issued for the moment (except to people in the priority groups) and eligible applicants are being held on a reserve list.
Buyers with a passport have three months to have an offer accepted on a property. If they have not found a property within this time, their passport expires. Whenever passports expire, the RSL administering the scheme first issues new passports to any buyers on the reserve list from the priority groups listed above. In some administrative areas, the RSL will then prioritise applicants who wish to buy in Council areas where there has so far been a lower than expected proportion of purchases (this includes: Scottish Borders, Fife, Dundee, Angus and Moray). Any remaining passports are then issued to those at the top of the reserve list. Progress in all geographic areas will be kept under review so funds can be reallocated between regions if appropriate. If you have any queries or want to get an update on the availability of passports in a certain area, please contact the relevant administering RSL. Their contact details are available at the end of this note.
As a result, while we welcome your support in promoting the scheme, we would ask that, in these areas, the focus is placed only on promoting the scheme to buyers from priority groups at the current time. We will provide an update to this note if circumstances change and more passports become available. In other areas of Scotland, there are still sufficient passports available, although we will provide an update if this position changes over the coming months.
Deposits
A few lenders currently offer mortgages for OMSEP without a deposit (although this may depend on the buyer's credit rating). Others do require a deposit, although this is generally smaller than the level of deposit currently being required for non-shared equity mortgages. This can help a wide range of buyers to access the scheme, but the scheme is not intended to allow people to buy if they do not have a deposit and should not be marketed in this way to buyers. As noted above, the scheme is only open to buyers on low to moderate incomes; it is not available to those on higher incomes who could secure a sufficient mortgage to buy a home on the open market, but have not yet saved sufficient funds for their deposit.
The Scottish Government does not currently require OMSEP buyers to have a deposit to access the scheme, but it does encourage buyers to provide one where they can.
Contact details
If you have any queries about eligibility or whether a waiting list is in operation, please contact the RSL administering the scheme in the area you are interested in. Contacts are:
For The City of Edinburgh, East Lothian, Fife, Midlothian, Scottish Borders and West Lothian Council areas
Link Homes
Link House, 2c New Mart Road
Edinburgh EH14 1RL
Tel: 08451 550019
http://www.linkhousing.co.uk/link-homes
For Argyll & Bute, Dumfries & Galloway, East Ayrshire, East Dunbartonshire, East Renfrewshire, Glasgow, Inverclyde, North Ayrshire, North Lanarkshire, Renfrewshire, South Ayrshire, South Lanarkshire and West Dunbartonshire Council areas
Link Homes
Watling House, Callendar Business Park
Falkirk FK1 1XR
Tel: 08451 550019
http://www.linkhousing.co.uk/link-homes
For Aberdeen City, Aberdeenshire and Moray Council areas
Grampian Housing Association Limited
Huntly House, 74 Huntly Street
Aberdeen AB10 1TD
Tel: freephone 0800 121 4496
http://www.grampianhousing.co.uk/index.php?id=12
For Angus, Clackmannanshire, Dundee, Falkirk, Perth & Kinross and Stirling Council areas
Link Homes
Watling House, Callendar Business Park
Falkirk FK1 1XR
Tel: 08451 550019
http://www.linkhousing.co.uk/link-homes
For the Highland Council Area
Albyn Enterprises Ltd
98-100 High Street
Invergordon
Ross-Shire IV18 ODL
Tel: 01349 855991 or 0789 4568182
http://www.albynhousing.org.uk/housing-options.html
For the Eilean Siar Council area
Albyn Enterprises Ltd
68 Maclennan Crescent
Inverness IV3 8DN
Tel: 01463 259895
http://www.albynhousing.org.uk/housing-options.html
For the Orkney Housing Council Area
Orkney Housing Association Ltd
39A Victoria Street
Kirkwall
Orkney KW15 YDN
Tel: 01856 875253
http://www.orkneycommunities.co.uk/orkneyhousing/contact.asp
For the Shetland Islands Council area
Hjaltland Housing Association Ltd
2 Harbour Street
Lerwick
Shetland ZE1 OLR
Tel: 01595 694986
http://www.hjaltland.org.uk/about/contact.html
Updated 23 September 2009